Tea leaves and animal entrails proved inefficient
TA doom-and-gloom predictions based entirely on the chart once again fail to materialize, as they failed to materialize during every other pullback since Mar 9, 2009 bottom. The conclusion: when you hear TA people talk about S&P 500 crashing to 500 because the chart says so, you should only infer a small pullback due to those TA lemmings fleeing the ship. To quote myself:
"Then there will be emotional stress, there will be momentum, there will be Elliott Wave charts and all the thousand reasons why we should go down. Tea leaves reading will point to a bear market and bird entrails will indicate Wave 3 of Wave III of wave iii of wave 3) of wave iii) of wave Three, and all these waves will be peaking at 1100 and cascading down to 500. And all the mo-mo investors will be looking at these waves and hitting the sell button, getting rid of the ridiculous jokes like XOM but also of the reliable, profitable companies like WMT.
All of that would not be sufficient to make a dent in the market if it were reasonably valued. But we are still in the stratosphere and extended valuations make us vulnerable to hysterical pullbacks. That's why I think we may have another 10-15% downside from here."
That was on May 18, when S&P was at 1120. The index bottomed at 1020 two weeks later.