SP 500 to never hit 1050 again

I

increasenow

SP 500 to never hit 1050 again...in 2009...here is why:

Stochs
RSI
CCI
Bollinger bands
MA's
...all show it...
Sell for year end profits trading...

I'm thinking short the ES, buy SPY puts and buy SPX puts...agree, disagree?
 
Possible, but I disagree. First, I believe way too many people have come to rely on TA as a sole predictor, hence it is no longer as useful as it used to be. The more people know about and employ a certain strategy, the less effective it becomes, and TA has become WAY too popular in recent years, which is why for instance, we see so many more false breakouts and breakdowns, because everyone and their brother is watching the same support/resistance levels and technical indicators. And the markets will always behave in such a way as to benefit the fewest number of participants.

So that's why I don't put much stock (pardon the pun) in technical indicators or being a slave to the charts anymore.

From a fundamental perspective, based on the economy, the S&P has no business being up here, it should be closer to 400. But again, the markets can remain irrational longer than you can remain solvent, so what has to happen over the long term has no bearing on what might happen over the short or medium term.

Right now, there are still too many people who "know" that the market has to fall, and are lining up to short it. Everyone watching the technical indicators and looking at market history, etc. sees the same thing, and it all is setting up too "perfectly", it's too easy. Therefore, in keeping with the truism that the markets will behave in such a way as to benefit the fewest number of participants, IMO the likeliest move for the markets would be a strong correction this month that scares the longs and emboldens the shorts, followed by a sharp turnaround and one final blistering run up through year end or early next year to new highs that burns the shorts and draws in all the remaining amateurs and general public that have still been sitting on the sidelines, fretting about having missed the huge rally since March.

Then once the last of the amateurs have piled in, and most of the shorts who were convinced the rally was over are confused and start to doubt themselves, that's when the market rolls over for good.

For the record, I'm currently short on the market, but my expectation is that this isn't the "big" drop yet, just a sharp, quick correction before one last hurrah higher. Doesn't mean I'm right, that's just what I'd consider to be the likeliest course of action for the markets to benefit the fewest number of people.
 
Quote from zboy2854A:

Possible, but I disagree. First, I believe way too many people have come to rely on TA as a sole predictor, hence it is no longer as useful as it used to be. The more people know about and employ a certain strategy, the less effective it becomes, and TA has become WAY too popular in recent years, which is why for instance, we see so many more false breakouts and breakdowns, because everyone and their brother is watching the same support/resistance levels and technical indicators. And the markets will always behave in such a way as to benefit the fewest number of participants.

So that's why I don't put much stock (pardon the pun) in technical indicators or being a slave to the charts anymore.

From a fundamental perspective, based on the economy, the S&P has no business being up here, it should be closer to 400. But again, the markets can remain irrational longer than you can remain solvent, so what has to happen over the long term has no bearing on what might happen over the short or medium term.

Right now, there are still too many people who "know" that the market has to fall, and are lining up to short it. Everyone watching the technical indicators and looking at market history, etc. sees the same thing, and it all is setting up too "perfectly", it's too easy. Therefore, in keeping with the truism that the markets will behave in such a way as to benefit the fewest number of participants, IMO the likeliest move for the markets would be a strong correction this month that scares the longs and emboldens the shorts, followed by a sharp turnaround and one final blistering run up through year end or early next year to new highs that burns the shorts and draws in all the remaining amateurs and general public that have still been sitting on the sidelines, fretting about having missed the huge rally since March.

Then once the last of the amateurs have piled in, and most of the shorts who were convinced the rally was over are confused and start to doubt themselves, that's when the market rolls over for good.

For the record, I'm currently short on the market, but my expectation is that this isn't the "big" drop yet, just a sharp, quick correction before one last hurrah higher. Doesn't mean I'm right, that's just what I'd consider to be the likeliest course of action for the markets to benefit the fewest number of people.
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tremendous post...thanks for your insight!
 
The S&P Dec futures will hit 1050 on Wed. The RSI went overbought 2 weeks ago and went down to ~40 on Friday last week. In a bull market, which we are currently in, Support comes in at ~40 on the RSI when there is a pullback.

Read the posts on ET and you can see a sampling of all the pessimism running through the country. We've got people on here predicting the end of the American empire and wringing their hands over 10% unemployment. This market, and America, have a long run ahead of us.
 
Quote from RangeBar:

The S&P Dec futures will hit 1050 on Wed. The RSI went overbought 2 weeks ago and went down to ~40 on Friday last week. In a bull market, which we are currently in, Support comes in at ~40 on the RSI when there is a pullback.

Read the posts on ET and you can see a sampling of all the pessimism running through the country. We've got people on here predicting the end of the American empire and wringing their hands over 10% unemployment. This market, and America, have a long run ahead of us.
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"In a bull market, which we are currently in"

really?

whole rally looks like little more than a backtest of the spx 200 month moving average to me - i don't see a siuper-bear trendline broken, do you?

tring to determine what 'they' are all thinking, and then being a 'contrarion', is just noise

it was one of the largest rallies of all time. one rally, 57% the size of the entire previous bear market 2000-2002

and if you look at the largest historical rallies, what type of market were they in?-> BEAR

<img src = "http://www.elitetrader.com/vb/attachment.php?s=&postid=2594812">
 

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Quote from RangeBar:

... Support comes in at ~40 on the RSI when there is a pullback.
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:confused:
Really? In what time frame? What look back period?

RS = Average Gain / Average Loss

RSI = 100 – (100/(1 + RS))

So this simple equation tells us when buyers are going to step up?
 
The chart presented by swtrader goes back about 13 years to 1996. Looking at the left side of the chart and moving to the right edge shows a solid bull market in effect. If I were going to make a case for being in a 'bear market' I would at least expect to see prices on the left side of the chart to be higher than prices on the right.

Admittedly, I don't trade on the 13-year timeframe but at the most it looks like we are in a 123 correction/consolidation wave within a bull market. if consolidations generally resolve themselves in the direction of the preceeding move then it is obvious the next major move should be up. Of course, until it doesn't.

(The RSI I was referring to is based on the Daily charts.)
 
Quote from swtrader:

tring to determine what 'they' are all thinking, and then being a 'contrarion', is just noise
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Not if you can consistently make good money off of it. :cool:

But of course there's more to it than that, no single indicator or factor should be taken in a vacuum.

In any case, many people's so called technical analysis can also be considered "noise". But if it works for you, it works for you.
 
Quote from RangeBar:

The chart presented by swtrader goes back about 13 years to 1996. Looking at the left side of the chart and moving to the right edge shows a solid bull market in effect. If I were going to make a case for being in a 'bear market' I would at least expect to see prices on the left side of the chart to be higher than prices on the right.

Admittedly, I don't trade on the 13-year timeframe but at the most it looks like we are in a 123 correction/consolidation wave within a bull market. if consolidations generally resolve themselves in the direction of the preceeding move then it is obvious the next major move should be up. Of course, until it doesn't.

(The RSI I was referring to is based on the Daily charts.)
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"If I were going to make a case for being in a 'bear market' I would at least expect to see prices on the left side of the chart to be higher than prices on the right.
"

maybe you need glasses, I see higher prices on the left side of the chart, as far back as 1998, 11 years

i see them from 1998-2001, and 2003-2008 - all on the left side of the chart
 
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