Are We On The Verge Of More Market Melt Downs?
In an act of seppuku, I thought I'd put up a post before the Federal Reserve's policy announcement. In other words, I believe the market has discounted any possible announcements tomorrow and will do whatever it will do regardless.
Commodity markets have been on a partying binge this past month and some surveys of Wall Street professionals now point to a consensus the worst is behind us. Remember, these same people didn't see any of this coming. And, they still are oblivious to what caused the problems in the first place. In other words, those that believe the worst is behind us are clearly groping in the dark. Given that fact, what is the chance they'll pick the particular moment when the economy is in recovery? I'd say just about zero.
The only equity index in the U.S. that really matters is the S&P 500 regardless of what sector one may be invested in. It's deep, it's liquid and it's where the big money roams. And, it's probably the best bellwether on earth for gauging both the American and global economy. Guess what? It ain't done nothing since the herd called the market bottom (again) over a month ago. Yes, it's up one hundred points in the last six weeks but that was basically comprised of two days worth of action on March 18th and April Fool's Day. It might also be of interest to note I received the first 2008 buy signal on my S&P trading system on April 1st. But since it wasn't confirmed I believe we must prepare for a reversal if the market falters within the week.
On that note, there is some reason to believe we will complete a corrective pattern this week. That may have happened as early as Monday. That corrective pattern I am referring to would be the five wave count move marked by three up moves interlaced with the two down moves contained within the rising triangle or wedge pattern in the S&P chart below. If this pattern resolves itself as I am anticipating, we could be about to start the next leg down. This move could be very painful because regardless of what is being reported, the global economy's weakness is picking up substantial momentum. If market weakness does develop, it will likely be because many have finally realized the largest risks lie outside of the U.S. This could therefore be the impetus for a turning point in the dollar I have been anticipating. We shall see. As I wrote before, I anticipate the next down leg to be between 1100-1150 on the S&P. Let's see how this pattern resolves itself around the Fed meeting.
Commodity markets have been on a partying binge this past month and some surveys of Wall Street professionals now point to a consensus the worst is behind us. Remember, these same people didn't see any of this coming. And, they still are oblivious to what caused the problems in the first place. In other words, those that believe the worst is behind us are clearly groping in the dark. Given that fact, what is the chance they'll pick the particular moment when the economy is in recovery? I'd say just about zero.
The only equity index in the U.S. that really matters is the S&P 500 regardless of what sector one may be invested in. It's deep, it's liquid and it's where the big money roams. And, it's probably the best bellwether on earth for gauging both the American and global economy. Guess what? It ain't done nothing since the herd called the market bottom (again) over a month ago. Yes, it's up one hundred points in the last six weeks but that was basically comprised of two days worth of action on March 18th and April Fool's Day. It might also be of interest to note I received the first 2008 buy signal on my S&P trading system on April 1st. But since it wasn't confirmed I believe we must prepare for a reversal if the market falters within the week.
On that note, there is some reason to believe we will complete a corrective pattern this week. That may have happened as early as Monday. That corrective pattern I am referring to would be the five wave count move marked by three up moves interlaced with the two down moves contained within the rising triangle or wedge pattern in the S&P chart below. If this pattern resolves itself as I am anticipating, we could be about to start the next leg down. This move could be very painful because regardless of what is being reported, the global economy's weakness is picking up substantial momentum. If market weakness does develop, it will likely be because many have finally realized the largest risks lie outside of the U.S. This could therefore be the impetus for a turning point in the dollar I have been anticipating. We shall see. As I wrote before, I anticipate the next down leg to be between 1100-1150 on the S&P. Let's see how this pattern resolves itself around the Fed meeting.
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