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Saturday, April 11, 2009 10:36:43 PM
Amateur Investors Weekend Market Analysis (4/11/09):
http://www.amateur-investor.net/Weekend_Market_Analysis_April_11_09.htm
I have been receiving a lot of questions this week asking if the Bear Market is finished? Let's go back to the last Bear Market from 2000-2002 and look at a Weekly Chart of the S&P 500. Notice how the S&P 500 made a series of lower Lows which with each one substantially lower than the first which were followed by some impressive Bear Market rallies of greater than 20% at times before the real bottom occurred in late 2002. Also note that this part of the Cyclical Bear Market didn't end until the last Low (point A) was just slightly below the previous Low. Furthermore this Bear Market Low wasn't confirmed until early 2003 when the S&P 500 made a higher Low which was then followed by a Bull Market run from 2003 through late 2007. Of course the bullish run from 2003 until late 2007 set the stage for an even bigger drop from late 2007 through early 2009.
Now if we look a current Weekly Chart of the S&P 500 we have been seeing a similar pattern since late 2007 as the S&P 500 has made a series of lower Lows followed by some decent Bear Market rallies. Although the latest rally from the 667 low has been impressive it's just another Bear Market rally unless the S&P 500 can break the string of lower Lows in the future like we saw in early 2003.
As I have mentioned in the past the current rally isn't a surprise as the major averages completed a longer term Elliott 5 Wave pattern in early March. Remember once the final 5th Wave ends an impressive ABC type rally follows and that is exactly what we are seeing develop.
At this time the major averages are likely nearing completion of the "A" Wave up in association with the ABC pattern shown above which will be followed by a "B" Wave pullback in the weeks ahead. So far the Nasdaq has been acting the best as it has risen above its previous downward trend line (brown line) and has rallied just above its 23.6% Retracement Level calculated from the October 2007 high to the March 6th, 2009 low. After we see a "B" Wave pullback occur then the Nasdaq may eventually rally up to its longer term 38.2% Retracement Level near 1870 for Wave "C".
The Dow has now rallied back up to a key resistance area near 8100 which is close to its 23.6% Retracement Level calculated from the peak of Wave 2 to the bottom of Wave 5. In addition its 20 Week EMA (green line) and downward trend line (brown line) also come into play near the 8100 level as well. After a "B" Wave pullback occurs then the Dow may eventually rally up to the 9000 level for Wave "C" which is at the 38.2% Retracenment Level and 40 Week EMA.
As for the S&P 500 it has also rallied up to a key resistance area in the 850's which coincides with its 38.2% Retracement Level calculated from the peak of Wave 2 to the bottom of Wave 5. Also its downward trend line and 20 Week EMA also reside in the 850's as well. After a "B" Wave pullback occurs the S&P 500 may eventually rally up to around the 960 area for Wave "C" as this is where its 38.2% Retracement Level and 40 Week EMA reside at.
Keep in mind at this point the major averages are extremely overbought on a Weekly timeframe so I would be on the lookout for a pullback to develop before much longer which would likely act as the "B" Wave as talked about above.
Finally here is one type of potential chart pattern to watch for in the weeks ahead like occurred in late 2002 and 2003. Notice back then the Dow made a lower High in early 2003 which led to the development of a bullish Inverse Head and Shoulders pattern.
A current chart of the Dow is shown below and it's possible if the "B" Wave drops back to around 7400 or so then this could lead to another bullish Inverse Head and Shoulders pattern like occurred in early 2003. Thus this is one potential pattern to watch for in the coming weeks.
In 2008 our ETF Strategies worked the best with which had a return of +33% versus the S&P 500 which was down -38.5% for the year.
Meanwhile our 401K Strategy finished up +17.3% for the year.
Signup for a "Free 4 Week Trial Membership" or save up to 50% on a Premium Membership and you will have access to these Investment Products which include the following:
1. "ETF Daily Buy and Short Signals" which can be used to trade the DIA's, QQQQ's, SPY's and OIH's. Our ETF Strategy returned 33% in 2008.
2. "401K/Thrift Savings Plan (TSP) Timing Service" which can be used to help improve your return in your 401k/TSP Account which was up +17.3% in 2008.
3. The "End of Month Strategy" finished up +36.3% in 2008. This Strategy focuses on the typical End of Month markup by the Institutional Money.
4. "Stocks to Buy List" which can be used with either our Short Term Strategy or Long Term Strategy. In 2007 our Long Term Strategy finished even for the year versus the S&P 500 which was down -38.5%.
Our Spring Membership Special for new Members is shown below
which are 50% Off our normal Monthly Rate of $39.95
http://www.amateur-investor.net/Weekend_Market_Analysis_April_11_09.htm
I have been receiving a lot of questions this week asking if the Bear Market is finished? Let's go back to the last Bear Market from 2000-2002 and look at a Weekly Chart of the S&P 500. Notice how the S&P 500 made a series of lower Lows which with each one substantially lower than the first which were followed by some impressive Bear Market rallies of greater than 20% at times before the real bottom occurred in late 2002. Also note that this part of the Cyclical Bear Market didn't end until the last Low (point A) was just slightly below the previous Low. Furthermore this Bear Market Low wasn't confirmed until early 2003 when the S&P 500 made a higher Low which was then followed by a Bull Market run from 2003 through late 2007. Of course the bullish run from 2003 until late 2007 set the stage for an even bigger drop from late 2007 through early 2009.
Now if we look a current Weekly Chart of the S&P 500 we have been seeing a similar pattern since late 2007 as the S&P 500 has made a series of lower Lows followed by some decent Bear Market rallies. Although the latest rally from the 667 low has been impressive it's just another Bear Market rally unless the S&P 500 can break the string of lower Lows in the future like we saw in early 2003.
As I have mentioned in the past the current rally isn't a surprise as the major averages completed a longer term Elliott 5 Wave pattern in early March. Remember once the final 5th Wave ends an impressive ABC type rally follows and that is exactly what we are seeing develop.
At this time the major averages are likely nearing completion of the "A" Wave up in association with the ABC pattern shown above which will be followed by a "B" Wave pullback in the weeks ahead. So far the Nasdaq has been acting the best as it has risen above its previous downward trend line (brown line) and has rallied just above its 23.6% Retracement Level calculated from the October 2007 high to the March 6th, 2009 low. After we see a "B" Wave pullback occur then the Nasdaq may eventually rally up to its longer term 38.2% Retracement Level near 1870 for Wave "C".
The Dow has now rallied back up to a key resistance area near 8100 which is close to its 23.6% Retracement Level calculated from the peak of Wave 2 to the bottom of Wave 5. In addition its 20 Week EMA (green line) and downward trend line (brown line) also come into play near the 8100 level as well. After a "B" Wave pullback occurs then the Dow may eventually rally up to the 9000 level for Wave "C" which is at the 38.2% Retracenment Level and 40 Week EMA.
As for the S&P 500 it has also rallied up to a key resistance area in the 850's which coincides with its 38.2% Retracement Level calculated from the peak of Wave 2 to the bottom of Wave 5. Also its downward trend line and 20 Week EMA also reside in the 850's as well. After a "B" Wave pullback occurs the S&P 500 may eventually rally up to around the 960 area for Wave "C" as this is where its 38.2% Retracement Level and 40 Week EMA reside at.
Keep in mind at this point the major averages are extremely overbought on a Weekly timeframe so I would be on the lookout for a pullback to develop before much longer which would likely act as the "B" Wave as talked about above.
Finally here is one type of potential chart pattern to watch for in the weeks ahead like occurred in late 2002 and 2003. Notice back then the Dow made a lower High in early 2003 which led to the development of a bullish Inverse Head and Shoulders pattern.
A current chart of the Dow is shown below and it's possible if the "B" Wave drops back to around 7400 or so then this could lead to another bullish Inverse Head and Shoulders pattern like occurred in early 2003. Thus this is one potential pattern to watch for in the coming weeks.
In 2008 our ETF Strategies worked the best with which had a return of +33% versus the S&P 500 which was down -38.5% for the year.
Meanwhile our 401K Strategy finished up +17.3% for the year.
Signup for a "Free 4 Week Trial Membership" or save up to 50% on a Premium Membership and you will have access to these Investment Products which include the following:
1. "ETF Daily Buy and Short Signals" which can be used to trade the DIA's, QQQQ's, SPY's and OIH's. Our ETF Strategy returned 33% in 2008.
2. "401K/Thrift Savings Plan (TSP) Timing Service" which can be used to help improve your return in your 401k/TSP Account which was up +17.3% in 2008.
3. The "End of Month Strategy" finished up +36.3% in 2008. This Strategy focuses on the typical End of Month markup by the Institutional Money.
4. "Stocks to Buy List" which can be used with either our Short Term Strategy or Long Term Strategy. In 2007 our Long Term Strategy finished even for the year versus the S&P 500 which was down -38.5%.
Our Spring Membership Special for new Members is shown below
which are 50% Off our normal Monthly Rate of $39.95
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