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Bearish on the Market-SPX Target=1150
- Thread starter michaelscott
- Start date
There are not facts, these are predictions and opinions.Quote from michaelscott:
The facts are the following:
2) The ten year yield has no place to go but up. We are no longer living in a sub-5% TNX environment.
3) Oil has no place to go but up. A floor has been placed underneath the price. Say goodbye to sub-70 dollar oil and triple digits will be seen in the future.
Quote from michaelscott:
The message is the following. The SPX is going to 1150. Every index and measure of the market is breaking down. The only thing propping up the market is a few leading stocks and if anything happens to them then the market will fall fast and furiously.
The facts are the following:
1) The market is a giant staircase in which it runs in 15-20 year cycles. The market will run straight up for 15-20 years and then follows a consolidation period of 15-20 years. We are only 7 years into the consolidation period. If the SPX were to break through the 1550-1600 level then it will be the first time that the chain of events will be broken.
2) The ten year yield has no place to go but up. It will of course pullback from time to time, but the general course is up up up. We are no longer living in a sub-5% TNX environment.
3) Oil has no place to go but up. A floor has been placed underneath the price. Say goodbye to sub-70 dollar oil and triple digits will be seen in the future.
In looking at the 20 year chart of the SPX from 1980 to 2000, it appears much like Apple computer the last few years. The index went straight up without looking back. That my friends is a true bull market. Cheap energy, downtrending TNX, low inflation.
Now we are in an environment much like the 70s where the SPX will run up to the line and then retreat like a bunch of Iraqi soldiers during the initial invasion. Of course there will be money to be made, but only by those who recognize what is going on.
Therefore the SPX will retreat back to 1150 before moving forward to 1550 once again. This wont happen in 2 years, but in the months to follow and by the end of this year we will be wondering what in the hell happened.
The volume on the SPX in June hit an all time record. There was only one up week in June, only one weekly bar of green while the rest was red. So I ask you, when there is a high volume sell on a chart, what do you think and believe will happen next?
Consider this, despite a record of volume on the SPX, it still failed to go through the all important 1550 barrier. Instead it pulled back and is now making lower highs and lower lows.
Hi Michael,
Your facts are somewhat skewed because you are not looking at enough history.
I just recieved this link a few days ago from a friend. It is about the markets and their direction based upon a historical perpsective. The videos are about 20 minutes. I am not promoting the site or their services, just offering information to those that are interested.
http://gannglobal.com/v/sp05/?img=140&kbid=1436
Quote from michaelscott:
Now I want to hear the arguments that attack my message, but I feel I will only receive personal attacks and jabs. What are the reasons as to why the SPX will now break through the all important 1550?
Since your original post practically BEGS for a snap-the-head-back-right-jab...first the gratuitous personal swipe: you have a tendency to be a bit of a windbag. Standing aside from this issue, I am inclined to trade on your side of the ledger at this point. I believe in the existence of broad markets cycles. I lean toward your interpretation of this one. However, I can't trade upon this for more than one reason - the chief being that this issue fades in relevance as one's trading timeframe gets shorter. Oil? Yeah, I'm one of those guys who believes that there will be a period of significant dislocation because of the Peak Oil scenario. Will this necessarily manifest itself as a doomsday market situation in 2007? I believe that it is folly to make a prediction this specific. The shit could hit the fan in 2008...2009...2010...2015. Nobody knows for SURE...so, I can't trade THAT concept either. Similarly for bonds. I'm inclined to go with you on that one, BUT, there are better ways to gauge the present health and future prospects of the market than shooting a bullseye on the direction of the 10 Year yield.
If you look beneath the surface (indices) of the domestic equities markets, glimmers of a market breakdown are appearing. Secondary issues are, in a broad sense, showing signs of lagging. Generally this condition indicates a higher than normal likelihood of forthcoming market weakness. I wouldn't be at all surprised if your prediction comes to pass.
I do think that the SPX is a good buy and hold index and serious money made...that is if your investment horizon is 20+ years and you buy on pullbacks.
You know that the SPX has 1 of either 2 cycles. It either goes straight up or chops up and down. Either cycle has tended to last between 15-20 years.
So during the chop-chop cycle, you accumulate on obvious pullbacks. Then you keep holding and wait until the next cycle. Keep accumulating on the way up and then finally dump when it reaches the top of the cycle.
In January 1950, the SPX was at 17 dollars. In October 1968, it reached 109. 6.4X return on your cash. 35% per year average.
Then came the chop. In April 1982, the index was still right around 109. A 0% return (except for dividends) for 14 years.
Then came the ultimate run. 109 to 1550 in another 18 years. 14.2X. Average 78% each year.
So at the end of this chop will be a magnificent run and the SPX should be bought on any pullbacks.
The above scenario, though, is not trading and more appropriate as a buy/hold strategy in a retirement account that revolves around the S&P500 index.
You know that the SPX has 1 of either 2 cycles. It either goes straight up or chops up and down. Either cycle has tended to last between 15-20 years.
So during the chop-chop cycle, you accumulate on obvious pullbacks. Then you keep holding and wait until the next cycle. Keep accumulating on the way up and then finally dump when it reaches the top of the cycle.
In January 1950, the SPX was at 17 dollars. In October 1968, it reached 109. 6.4X return on your cash. 35% per year average.
Then came the chop. In April 1982, the index was still right around 109. A 0% return (except for dividends) for 14 years.
Then came the ultimate run. 109 to 1550 in another 18 years. 14.2X. Average 78% each year.
So at the end of this chop will be a magnificent run and the SPX should be bought on any pullbacks.
The above scenario, though, is not trading and more appropriate as a buy/hold strategy in a retirement account that revolves around the S&P500 index.