Posted by: rp on the 4th of Jan 2012 at 01:18 pm
Title: philosoraptor- market thoughts
phil- happy new year to you as well. fwiw, my confidence is low right now. i can make a bang-up case for either the bullish or bearish scenario right now. in a nutshell, so many key stocks and indexes have recently put in divergent lows which, technically speaking, have more upside to play out from those patterns. as i pointed out last week, the EUR/USD finally hit a key downside support line that i’ve been targeting for months now… and with a solid positive divergence put in place on that low to boot (which points to a decent bounce in the EURO from here and with that, stocks up). plus, this market has been very resilient since the oct lows and we have many key stocks (INTC, WMT, HD, AAPL, etc… recently making new highs). that’s the bull case.
bear case is that the charts looked nearly identical on the wave 2 bear market rally highs back in june ’08…positive divergence across the board, many key stocks making new highs, pundits everywhere declaring the worst is over, etc… even that VIX weekly comparison i put up a few days ago is uncannily similar to me.
bottom line- if we are going lower, we need to start doing so soon in order to bust-up the bullish technicals in place right now. that is exactly how wave 3 down started off in 2008… a sudden turn lower right when the charts were max bullish. however, as i’ve made the case for recently, the charts still do allow for more upside in equities and the EURO and more downside in treasuries and the $USD and we can’t expect this bear market to continue to play out so similar to the last one forever.