Weekly Update -- Waiting

LONG TERM TREND: Not much new to report this week. The positive news is that for the 2nd week out of the last three, the market finished higher. So at least for now things appear to have stabilized a bit. As I said before the market still has a bit of downside to go in order for the long term trend to shift down.

SUGGESTION FOR 401-K: Despite the fact the market closed up for two out of the last three weeks, it still has a lot of work to do to convince me the long term trend will start another up leg. Take a look at the attached chart and the commentary on it. Bottom line is that although last week closed up, it looked rather weak when compared to the previous down week. My long term money remains on the sidelines for now.



Have a blessed day everyone. I'm off to go fishing! As always, your comments, feedback, suggestions are welcome.

Weekly Update -- Trouble Ahead?

LONG TERM TREND: Today is a good time to give you a glimpse of what's happening on the monthly chart (see attached). As you can see the market so far in August is down about 18% from the high made in July. There are two comparisons I want to draw your attention to: 1) Notice how this month price has declined below the mid channel line. This last happened on January, 2008 (1st down arrow on left) to help facilitate the last major bear market. 2) The 2nd down arrow from the left is when the month of July 2008 broke below the lower channel line, which absolutely confirmed a long term bear market. This is why the current lower channel line around the 1000 area is so important. If that level is broken the probabilities highly favor another major bear market.



SUGGESTION FOR 401-K: Obviously now is no time to get back in even though technically the long term trend is still up. Due to this there is still the potential to get back in if but I must see some strong weekly strength to consider this.

Have a great week and as always, your thoughts, feedback and questions are welcome!

Weekly Update

LONG TERM SIGNAL: First, the good news...the long term trend is still up and there was some encouraging price action to support that last week. Take a look at the attached weekly chart of the SPY. The market sold off early in the week but then rebounded substantially to close higher.



SUGGESTION FOR 401-K: The bad news is that last week was not enough to convince me that we've reached a market bottom. What typically happens after the type of sell off we've recently experienced is what happened last summer (see chart). This was the last time there was a large weekly sell off below the mid line of the price channel (dashed line). As you can see the market drifted lower for several weeks and didn't establish a new buy signal in the long term direction for 17 weeks. In my opinion there is not enough to suggest a market bottom has occurred. My 401-K money stays out for the time being.

Hope you all have a great week. As always, any feedback is appreciated.

Weekly Update

LONG TERM SIGNAL: The long term trend is still up but weakening significantly. More on this later.

SUGGESTION FOR 401-K: WOW, I suspected that this week the 1250 level could be penetrated but so was the 1200 level on the S&P 500. The weekly bar actually closed just below 1200 this weak. This is obviously very bearish. My money was out last week before this decline. I hope you did likewise.

MORE ON THE LONG TERM TREND: Believe it or not, while things look pretty grim right now, technically the long term trend remains up. Take a look at the attached monthly S&P 500 chart. You'll notice a Zig Zag line which will plot up when the market rallies 10% or more from an important low and down when the market rallies 10% or more from an important high. There are two reasons I believe this bull market MAY not be over yet:



1) Notice how during the 2003-2007 bull market the S&P had three rallies of 10% or more before the final top. During the 2007-early 2009 bear market had three declines of 10% or more before the final bottom. Since March 2009 there have only been TWO rallies of 10% or more. Probabilities favor at least one more push of 10% before a final top.

2) Notice that in 2007 the third rally of 10% only made a marginal new high before the market sold off and the bear market began. In 2009 the third decline of 10% only made a marginal new low before the market rallied and the bull market began. Now in 2011 notice how much higher the second rally went than the first. The point is that most of the time the market will make some sort of double top before a bear market begins in earnest.

I'll be watching the market closely during the ensuing weeks to see how this plays out. Just a reminder to check your emails during the week as I plan looking for short term option opportunities. Be blessed!