Hey Torq, I never really look at the SMH, but you're absolutely correct. I think that shows a perfect description of what the true definition of a head and shoulders pattern is.
And, we all know, that usually the semis always have a part to play in any Nasdaq or NDX move. I just can't imagine the market moving up if the SMH breaks down. Looks very daunting.
However, at the same time, both the biotechs and financials are moving very well. Those are also market leaders.
My position has always been that fundamentally, the market has been coiling up the valuations now for 3 years with really no movement behind the increased earnings which are what eventually pushes up the prices. It's really funny, but it really does appear that the market has become one huge game of chicken. But a game that as you can tell by the long term chart is being won by the bulls. I think the slow grind up is a direct result of those earnings constantly advancing.
But, if we do in fact break down on a head and shoulders, I think it will be a very quick sell off that will only be caused by stop losses getting hit and will absolutely crash the indicators and oscillators. It will be that move that will lead to the eventual push higher.
It's either we start moving higher now, or that happens. In any case, I am going to stop averaging into the calls I've mentioned and wait for either to happen. I think the Q's are headed for $44 to $45 easily within the next two months, most likely within March. I know, I know, I can hear the laughter now from Poker. But by his stance, he's saying Q $39 before Q $44.
Let's see who's right. Mark this post.
I really am starting to think that there is a major head fake setting up here for the bears. It's gonna be bruttle. I have been reading all over the net tonight and you can't help but hear the cheering from those who believe we've seen the highs for the year. I believe they are going to get slammed here. And I mean slammed. This I think might end up being one of the biggest squeezes in history.
And all the while, as the bears parade thinking this is it, the market's fundamentals keep getting stronger. You keep hearing the news about 'slower home sales', 'consumers tapped out', 'oil going to $100 because of China demand', 'the dollar's going to crash'.....I know, it's all coming to an end.
Yet, what they have forgotten is the Fed. As you've all seen on at least 2 times in the last 6 months, each time the market has smelled an end to the tightning, the market gapped higher and didn't look back until they were proven otherwise. The first was when the Fed governor from Texas said we were in the '8th inning' of rate increases. Oh, I remember that day. I was trading YMs and had 5 contracts open and made 120 points in almost 20 minutes.
Then it was in Jan when the minutes came out suggesting some of the governors in Dec were balking at raising rates again. That is what led off that massive 5th wave the first week of Jan.
But all the news has been how the Fed is going to keep raising into the 5%s with no end in sight. But what would make that happen? Strong housing, strong GDP, strong ISM #s, and all the rest. What have we been getting? Weak housing, 1.5% GDP, and weak ISM #s. Let's see what Friday brings us on employment. So far, it looks like Bernanke's inflation targeting is just about where he wants it. Now, all we need is to hear it from one of them. If that happens, we're gone.
The market is going to run and the spec money in housing is all going to come into the market further killing real estate and doing the Fed's work for them. They know it and you're soon gonna hear it.
Remember, March is typically one of the strongest months of the year, next to Nov. Watch those shorts! You're getting suckered!
AI
