Market Insights™

Week Beginning 01/01

I am placing my bet that the December 28 major Bradley turn date represents the beginning of wave 3 to the downside (view latest EW count). I will now compare this count with the decline that began in November 2007.

Wave 1 spanned 22 weeks from November 2007 to March 2008, wave 2 took nine weeks into May 2008. Wave 1 spanned 22 weeks from May 2011 to October 2011, wave 2 took 12 weeks into late December. The bottom was reached 42 weeks later in March 2009 -- 42 weeks from now would be October 19. Wave 1 saw the S&P 500 fall 18 percent, wave 2 rise 11 percent, followed by a decline that took price down 58 percent from the top in 2007-2009. In 2011 wave 1 saw the S&P 500 fall 17 percent, wave 2 rise 12 percent, and a 58 percent decline from the top would take price down to 580.

The number of bearish newsletter writers (II survey) was 19% - 45% - 30% at the beginning of waves 1, 2, and 3 in 2007-2009. In 2011 the number of bearish newsletter writers was 16% - 46% - 30%. The weekly average put/call ratios back then were .84 - 1.27 - .82, they were .85 - 1.21 - .92 in the recent wave count. I think the similarities are both striking and significant.

Week Beginning 01/08

IMO, the S&P 500 is either wrapping up wave 2 or has begun the deadly wave 3 down. My daily model has triggered three sell signals since the beginning of December (view chart). Remember these sell signals require candlestick reversals on the daily charts so the latest signal has yet to be confirmed. A close above 1296 would have me going flat.

Week Beginning 01/22

Defying all that is rational, the market continues to rally. So what's new?

Week Beginning 01/15

I think this week's two charts speak for themselves regarding where I see the market is headed this week (view first chart) and (view second chart).

Week Beginning 01/29

My daily stock market timing model has been flashing sell signals every month beginning with October 2011 but none of the longer term models are in agreement. Typically this indicates that a very strong bull is in place that should take stocks to new cycle highs. Bizarre. My long term view is that the market went nuclear in the 1990s and has yet to pay the price for this. That price, from historical perspectives, says stocks will eventually retrace back to 1994 levels. With no other guide for the time being, I am staying put with my (somewhat painful) positions. By the way, I went to all cash in the trading portfolio a couple weeks ago but forgot to update my position in the newsletter -- sorry about that.