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Bearish? Hell Yeah! ... But Is This The "Top"?

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March 25, 2010 – Comments (15)

First things first. I am still bearish, very bearish. I am still very short (painfully so and deep in the red) from the shorts I established in mid-February. But before we get to the big picture, lets talk about the near term (next couple of weeks)

Minor Degree Wave up is Done (IMO) and Now we have *at least* a Minor Degree Wave Down

Count for this stupid, low volume, sh**ty breadth, generally annoying rally. And I argue it is not impulsive: Counts and Structures Within This Rally



ENLARGE

The McClellan Oscillator has been forecasting a trend change like I was pointing out in Mr. Plow, Rhizome and Tubers. The trigger MAs have definitively turned down and crossed and the trend MA is flattening



ENLARGE

The trendline chart was showing serious weakness. One the orange trendline was broken, it was never really recaptured. Now we have at least a lest (and break I suspect of the blue trendline)



ENLARGE

What this is telling me is that the next few weeks will be DOWN!!

... But is it the "Top" (of P2)?

It could be. Until we see 5 clear waves down in a impulse structure, with acceleration down on the 3rd wave, that is absolutely an unambiguously discernible on a 60 minute chart, there will not be a crash. That is the opening salvo. And even if we do see this, it DOES NOT guarantee a crash. But there is *no way* a crash will commence without this pattern.  P3 is an impulse, and so the first move of P3 *must* be impulsive.

So if we see this, then I will be a *very happy bear*

.... But, my gut says the next move will not be an impulse. Here is the large count I think we are in. I think the next Wave down is Minor B of Int Z of P2.



ENLARGE

There is another reason for why I think this. The NYSE Cumulative Advance/Decline Line has not been diverging. By diverging, I mean that as a measure of the internal strength of the wave, we should be seeing *weakening* internals. The A/D line should be making lowers highs near the top as price makes higher highs. That would be clear divergence.

Neither the A/D Line is diverging, nor is the High/Low line. Nor is the TRIN in any meaningful fashion.

But an indicator telling is we are getting close is that the daily breadth *spikes* are getting smaller and more infrequent. This move is *very* tired. ... But not dead yet IMO.



ENLARGE

15 Comments – Post Your Own

#1) On March 25, 2010 at 7:47 PM, cbwang888 (25.88) wrote:

Nice charting but just what happen to GV's Just do it call?

Interesting stock reversal today on weak Treasury 7-Yr notes auction. Looks like people prefer holding US Fed notes (USD) than US Treasury notes? After all, USD is the only AAA rating what won't lose its face value.

USD might soon reverse its course to downtrend due to Fed's low interest rate policy. Thene declining USD may boost some risky US stocks even further to more overbought situation ...

The stock/USD positive correlation is about to end in my opinion. Well, I could be as wrong as my CAP score ...

 

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#2) On March 25, 2010 at 8:44 PM, dragonLZ (99.45) wrote:

Great Binve has spoken...

This can only mean one thing: We have 3 more months of the wild bull run. 

Just kiddin'.

Good Luck Bears, Good Luck Bulls!

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#3) On March 25, 2010 at 9:08 PM, Option1307 (29.73) wrote:

How about them apples Bvine, you're so famous you get your very own personal Spammers!!!! Lucky you :)

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#4) On March 25, 2010 at 9:10 PM, Tastylunch (29.28) wrote:

Just noticed something binve

you've got the "yes man" charm.

LOL how weird is that for one of CAPS' best know bears?

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#5) On March 25, 2010 at 9:10 PM, Option1307 (29.73) wrote:

We need an edit button, ahhhh, sorry I meant Binve! I swear it's the beers fault buddy...

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#6) On March 25, 2010 at 9:32 PM, binve (< 20) wrote:

cbwang888 ,

Hey cbwang!

>>USD might soon reverse its course to downtrend due to Fed's low interest rate policy. Thene declining USD may boost some risky US stocks even further to more overbought situation

Even though I am *very* bearish on the Dollar long term, I think the DX could rally for the next several months, targeting 90-ish

see: http://marketthoughtsandanalysis.blogspot.com/2010/03/is-that-dollar-in-your-pocket-or-are.html.

and: http://caps.fool.com/Blogs/ViewPost.aspx?bpid=357812.

How much will gold pullback in response? I don't know. But any pullback is a gift, and I will certainly be buying.

>>The stock/USD positive correlation is about to end in my opinion. Well, I could be as wrong as my CAP score

Yep, I think we are in a long phase of Dollar Carry Trade unwinding and transistion from inverse dollar/equity correlation to positive dollar/equity correlation: see my argument here

Thanks for the comment man!!

dragonLZ,

>>Great Binve has spoken... This can only mean one thing: We have 3 more months of the wild bull run.

... Did you even read my post above? That is what I think. I think this is a minor pullback before higher highs (1230ish) in the early Summer.

You have misquoted / misinterpreted / misrepresented me for months. You are a troll.

Option1307 ,

Hey man!

>>How about them apples Bvine, you're so famous you get your very own personal Spammers!!!! Lucky you :)

... hmmm, which spammer in the comment section are you referring to? ... :) LOL! Thanks man :)

Tastylunch ,

>>Just noticed something binve. you've got the "yes man" charm. LOL how weird is that for one of CAPS' best know bears?

LOL! Nobody can turn their score into an Epic Fail, while being an optimist, like old binve :) 

Option1307,

LOL! No worries :) As long as you share what you are drinking, I will call it even :).

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#7) On March 25, 2010 at 9:51 PM, sentinelbrit (88.01) wrote:

I don't think this bull run is finished until we see a meaningful move out of bonds into equities i.e., the retail investor finally joins the party.

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#8) On March 25, 2010 at 10:16 PM, ChrisGraley (29.81) wrote:

OK, Chinese knock-off shoe guy is starting to tick me off. Can't TMF block IP addresses?

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#9) On March 25, 2010 at 10:18 PM, GeneralDemon (21.09) wrote:

Hey Binve,

I don't accept paypal... even for a cha nel wallet.

But, 

my shoot from the hip thought:

Your average investor must still be down from 2007 - so who are the ones pushing higher now? Are people pulling money out of safe stocks (like XOM) to buy more speculative ones (IKAN)? No one is using new "fresh" money, are they?

I am extremely confident that I don't know what's going on right now.

Still clinging to my gold stocks though.

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#10) On March 25, 2010 at 10:51 PM, binve (< 20) wrote:

sentinelbrit,

Fair enough

ChrisGraley ,

Amen to that.

GeneralDemon,

Hey man!

>>I don't accept paypal... even for a cha nel wallet.

LOL!

>>No one is using new "fresh" money, are they?

Exactly! And I totally don't buy the "mountain of money" argument either: http://caps.fool.com/Blogs/ViewPost.aspx?bpid=330817.

>>I am extremely confident that I don't know what's going on right now.

LOL! Me either. But I do enjoy making a fool out of myself and publically try :)

>>Still clinging to my gold stocks though.

Amen to that! Me too! Thanks man :)

ChrisGraley ,

>> The government has deemed this site as a valuable site for spamming and the government reserves the right to spam it exclusively! We are currently promoting General TSO's chicken..

LOL!!!

>>Thank you! That was a decent performance. As always we wish you great calmness and regular bowel movements. .

Man that was great!!!

... come to think of it, I could use a little more regularity in my bowel movements .... :).

 

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#11) On March 25, 2010 at 11:13 PM, Momentum21 (93.46) wrote:

Binve - thanks for the thoughtful analysis as usual. Your technical timing is starting to match with my gut feelings about when we might see a meaningful correction. That said I will favor the bullish side for 2010 because something that often gets overlooked is the fact that money has no place to go right now. Real estate gobbled up tons of retail (and institutional) money in the past decade and with everything in sync these days nothing seems particularly "safe."

This is the very oversimplified version of my thesis. I won't hijack your blog pontificating. : )

As a hedge, I have a pretty big position that I recently opened in SCO for a short-term hold since I think the Oil trade short has a pretty good risk/reward right now. Big supply, high end of the range we seem to be trapped in, etc...

I came across your NG thoughts somewhere today and want to see more Binve "long ideas"...besides FAZ of course! : )

Keep it up...my only hope is not to define myself as bullish or bearish...just open-minded and aware. Keeping up with all views helps to minimize the damage I do...

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#12) On March 26, 2010 at 12:00 AM, ChrisGraley (29.81) wrote:

Momentum, I have the same gut feeling and the same concern of a haven for money.

I think money does have 1 safe haven and I think binve agrees with me as well.

Precious metals are the place to park when you know that the market is overvalued.

We still have more money soaking sponges to come. 

No Jobs = Print more money.

Banks still have mostly toxic assets = Print more money. 

Just passed a monumental health care bill = Print more money.

Baby Boomers retiring = Print more money. 

An unpopular administration entering an election = Print more money.

A fed chief that has a nickname referring to throwing money out of helicopters = Print more money.

Even if none of the above happened and the economy was good right now, our previous expenditures would = Print more money.

Just my 2 cents and that's about all it's really worth. I might get rich off of it when inflation hits as hard as I think it will though. 2 cents worth of silver bought today, might buy a house tomorrow. 

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#13) On March 26, 2010 at 12:30 AM, Momentum21 (93.46) wrote:

ChrisG - inflation will be good for equities as well and I just think the risk/reward on stocks is better. If this is a new bull market gold will underperform...it will take what I see to be a low probability disaster outcome  to light a fuse under gold. Certainly possible mind you...and worth hedging for but it seems risky to bet on it with all of the other variables that will likely derail the obvious printing money argument. I respect your opinion though and you won't catch me shorting gold in RL! Only Crude Oil on occasion...

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#14) On March 26, 2010 at 12:53 AM, ChrisGraley (29.81) wrote:

Check out a chart of the DOW vs the DIG$ since March 9th of last year and it might put my opinion in a better perspective. Then look at the DiSoz and you'll understand why I have Silver every fricken place I can store it.

Everything is always your best guess, and this one is mine. I wish you well and hope your guess is good unless it's different from my guess. Then I don't wish you well as much.

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#15) On March 26, 2010 at 9:01 AM, binve (< 20) wrote:

Momentum21,

Hey! Absolutely, thanks!

>>That said I will favor the bullish side for 2010 because something that often gets overlooked is the fact that money has no place to go right now.

... well, like I was discussing earlier this week, the bond market is largely staying in cash: What the Bond Market is Trying to Tell the Stock Market: A Look at the Yield Curve and Expectations - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=355853. It is largely not buying the recovery story.

>>This is the very oversimplified version of my thesis. I won't hijack your blog pontificating. : )

No, please feel free!! pontificate away! I enjoy good discussions!

>>As a hedge, I have a pretty big position that I recently opened in SCO for a short-term hold since I think the Oil trade short has a pretty good risk/reward right now. Big supply, high end of the range we seem to be trapped in, etc.

I tend to agree. I have a lot of commodity holdings (I am a long term commodities bulls) as they are real assets. But I think risk/reward for the short term favors a pullback before the next major leg higher

>>I came across your NG thoughts somewhere today and want to see more Binve "long ideas"...besides FAZ of course! : )

LOL! Absolutely. I am probably more bullish on Natty over the long term (less so in the short term) because it is an obvious solution to a number of long term problems. It is underutilized and undervalued. Vet and I have had a lot of good discussions on Natty over the last year. Thanks!

ChrisGraley ,

>>I think money does have 1 safe haven and I think binve agrees with me as well. Precious metals are the place to park when you know that the market is overvalued.

Exactly!! It is the one sector the is still in the *middle* of (nowhere near the end) of a major secular bull market. It is driven completely by fiat currency devaluation and loss of confidence in the finanical system / treasury / fed / satus-quo

>>We still have more money soaking sponges to come.  (fill in the blank) = Print more money.

LOL! Exactly man. Did you read this post? I think you will appreciate the intro :) -Is Never Good For You? - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=358827

Momentum21,

>>inflation will be good for equities as well and I just think the risk/reward on stocks is better.

Hey Momentum, I have a real problem with this statement, and I lay my reasons for it here: Debt Saturation - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=357428

>>If this is a new bull market gold will underperform.

I honestly don't believe this is a new bull market, and I do think the wave structure supports it. That doesn't mean we "crash" necessarily in 2010. I see a possibility where we even continue this rally for the next couple of years Examination of the Large Technical Landscape / Possible Paths - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=350605. But it is within the context of a very long upward "correction" (think the NIKKEI) and not a major bull market. I think in 2000, the secular trend changed, and we are in a major bear market that we are in the middle of, not near the end of. My $0.02.

Thanks for the comments!

ChrisGraley,

>>Then look at the DiSoz and you'll understand why I have Silver every fricken place I can store it.

Right on man :)

>>I wish you well and hope your guess is good unless it's different from my guess. Then I don't wish you well as much.

LOL! At least you're honest :) Thanks for the comments man!!..

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