Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

How Bearish Should We Get?


While lower prices appear likely, the bigger question is: How much lower?


Below is a chart of SPX showing potential support/resistance zones and trend channels.

Click to enlarge

The bond market looks to be in trouble, which is one sign (of several) that things may be cracking under the surface, and that the wave counts may be more bearish than shown. Again, we'll discuss those options further in the upcoming updates.

Click to enlarge

Now, before we commit to the super-duper end-of-the-world bear view, it pays to be aware that there are several charts which are acting extremely non-committal to the bear case. One such chart is the BKX shown below. Unless BKX breaks down with conviction here, it has left itself three bullish options. One is near-term bullish, the other two are intermediate bullish. The option I'm not showing on this chart is for an ending diagonal, which would briefly break the 59.45 level, then rally back up toward the black "alt: (c)" label. The "standard" bear option is shown in blue.

Click to enlarge

In conclusion, several markets are still poised at inflection points across time frames. The patterns are set up that if things break, they could break in a big way -- in fact there is definite waterfall potential in the charts, which makes this a very dangerous market for bulls. But at the moment, a number of charts haven't actually broken yet, which means it's not a great spot for bears to become complacent. I feel fairly confident there are lower prices coming in the larger scheme of things, and that the T3 target zone will be reached -- it's more a question of whether this is going to turn into a mini-crash and head much lower, or if the market will rally along the way and move down in a more orderly fashion. The next few sessions should help clarify BKX (and some other indices), and give us a better idea of whether we should start thinking long-term bearish or not. Trade safe.

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos