Wednesday, April 08, 2009 11:58:22 PM
Look at this chart of the Nasdaq summation index --
Notice the higher high (way higher high) BUT with a lower high on the MACD. NEGATIVE DIVERGANCE with the summation in near record high territory. Screams for a larger pullback anytime.
Now, listening to Moe's show tonight, he's putting out this point --
If you look back at 2002 to 2003, you'll notice what happened was we got a low in Oct, then a retest (higher low) in March, then blast off.
Many are predicting the same here. However, as Moe pointed out, the wave counts are completely different this time as is the fundamental backdrop now compared to then. That bull market going into 2000 was led by a rush into tech for no reason other than to be in it. That was the selloff backdrop. Now, it's completely different. Now, it's led by a complete lack of capital/credit which as we know is the foundation of this economy. Face it, very few can afford to go out and buy a car or home or other large purchases like appliances/furniture for cash. They finance it. That is hard to get these days. Even in 2002 and 2003 credit was never a problem.
So, here we are in April after having a lower low made in March off the Nov lows. The problem? The wave count says (weekly) we're simply in a wave 4 now. (correction off the wave 3 decline into March 9th).
The next major cycle date high is in May. That implies we bounce around here right under resistance for the SPX (look at the chart above and that downtrend line we have yet to break (a break over 845 would confirm a new leg up)) and then sometime in the next 2 to 3 weeks break it for a final push higher to complete this wave 4.
Then what? Moe thinks that in May, many large investors will stop and take a look around and judge how the economy is recovering - if at all. Is the stimulus working? So far it doesn't seem like it is because most of the money that congress spent or is spending is on pet projects/paybacks/payoffs to donors of their party, not stimulus.
If it appears nothing is working, then watch out below. He seems to be convinced we're headed for a final wave 5 down into Oct/Nov taking out the lows taking the DOW into the 5000s. But that's all predicated on the stimulus not having any effect as companies report nothing to back up that things are getting better.
Many are pointing to the fact that stocks have been going up on bad news. Stocks like BBBY, RIMM, and others that obviously are just too shorted.
So, most likely we bounce around here for awhile and then push higher into SPX 900s. Then it gets dicy.
Remember, 'sell in MAY and go away'. It most of the time works and considering we just ran 1500 points in the DOW and probably have a little more to go, that will be more true this year than any other.
Notice the higher high (way higher high) BUT with a lower high on the MACD. NEGATIVE DIVERGANCE with the summation in near record high territory. Screams for a larger pullback anytime.
Now, listening to Moe's show tonight, he's putting out this point --
If you look back at 2002 to 2003, you'll notice what happened was we got a low in Oct, then a retest (higher low) in March, then blast off.
Many are predicting the same here. However, as Moe pointed out, the wave counts are completely different this time as is the fundamental backdrop now compared to then. That bull market going into 2000 was led by a rush into tech for no reason other than to be in it. That was the selloff backdrop. Now, it's completely different. Now, it's led by a complete lack of capital/credit which as we know is the foundation of this economy. Face it, very few can afford to go out and buy a car or home or other large purchases like appliances/furniture for cash. They finance it. That is hard to get these days. Even in 2002 and 2003 credit was never a problem.
So, here we are in April after having a lower low made in March off the Nov lows. The problem? The wave count says (weekly) we're simply in a wave 4 now. (correction off the wave 3 decline into March 9th).
The next major cycle date high is in May. That implies we bounce around here right under resistance for the SPX (look at the chart above and that downtrend line we have yet to break (a break over 845 would confirm a new leg up)) and then sometime in the next 2 to 3 weeks break it for a final push higher to complete this wave 4.
Then what? Moe thinks that in May, many large investors will stop and take a look around and judge how the economy is recovering - if at all. Is the stimulus working? So far it doesn't seem like it is because most of the money that congress spent or is spending is on pet projects/paybacks/payoffs to donors of their party, not stimulus.
If it appears nothing is working, then watch out below. He seems to be convinced we're headed for a final wave 5 down into Oct/Nov taking out the lows taking the DOW into the 5000s. But that's all predicated on the stimulus not having any effect as companies report nothing to back up that things are getting better.
Many are pointing to the fact that stocks have been going up on bad news. Stocks like BBBY, RIMM, and others that obviously are just too shorted.
So, most likely we bounce around here for awhile and then push higher into SPX 900s. Then it gets dicy.
Remember, 'sell in MAY and go away'. It most of the time works and considering we just ran 1500 points in the DOW and probably have a little more to go, that will be more true this year than any other.
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