Registered User
Joined: 12/8/2004
Posts: 1,301
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The dow, nasdaq and S&P 500 have all reached major reversal points simultaneously. The russell 2000 has room for about 20 more points. It would seem to me the next move is down from here.
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Registered User
Joined: 12/19/2004
Posts: 457
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Good question. I've been expecting a down move for quite some time. I'm starting to give up.
That probably means you are right!
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Registered User
Joined: 12/8/2004
Posts: 1,301
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Well I've been thinking this since february, and took appropriate action as I know you did. I took a little more out of my mutual funds in March, and I am trying to decide whether I want to be in a 75% cash position right now. I am at 60% now, and I am definitely leaning in the 75% direction.
I know earnings for metals and mining will be great for the first quarter. We already made more money in the first quarter than we made in 9 months last year, but I think we will see major selling into the rally for metals companies. Aluminum, copper, and precious metals still seem to have upward potential, but nickel and steel are probably going to start some major corrections.
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Registered User
Joined: 12/19/2004
Posts: 457
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FWIW--My Elliott Outlook:
I've held out for quite awhile with an Ending diagonal count as the preferred outlook for the Russell 2000, but people continue to bid the market higher.
I see large-caps still forming a C wave triangle, although I'm not sure if we are in wave c or wave e. I'm leaning towards wave c for now.
The Russell could still form an ending diagonal, but the action up to this point still tells me we are in wave 5.3.3, from the August 2004 low.
At this point, the preferred count is a 5 wave impulse from the August low.
In order for the ED to still be possible, then we would need to see a correction on the order of 25%. Considering small caps are more weighted towards energy and commodities, I don't see that happening.
Another reason why I don't see significant near term market weakness is the strength in the financials. People still think the Fed is going to be done with rates soon, and continue to bid the brokers and investment bankers higher.
Unfortunatley, any upside would appear to be limitted. A wave 4 or wave d correction could start any day, and take the Russell and/or the SP-500 toward the October lows.
I've been going long/short on individual stocks.
Longs have focused on precious metals, with some specific longs in tech (ie AAPL) on a short term basis.
Shorts include CAT, some biotechs, and housing related stocks, although I think the near term downside in HOV is limitted for the next few weeks, and might even rally.
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Registered User
Joined: 3/7/2006
Posts: 244
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Here's a shock - I may actually agree with you here.
Dow looks fugly on a daily, the weekly looks better though.
S&P - looks better and I think any pullback will be much lighter.
The Q's also look good weekly, but ugly daily.
Just looks like we may be due for an across the board correction. I don't see it as a bear market, just a normal, healthy correction. That's assuming Iraq or Venezuala (sp?) or one of those other idiot countries don't do something really stupid or oil doesn't go too much higher.
Oil is the thing that scares me most.
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Registered User
Joined: 1/28/2005
Posts: 6,049
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Quote:"It would seem to me the next move is down from here."
How far down?
There would seem to be a difference between a 5 to
10% correction and a "crash".
This is a time when some type of weakness usually happens.
Before the "summer rally".
As rmr1976 has said. Im showing all kinds of strength in
tech and financials. (which would seem bullish)
It doesnt "smell" like a major top yet.
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Registered User
Joined: 12/8/2004
Posts: 1,301
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No, I don't think it will be a bear market correction(20%), but it certainly can drop 10%, stay flat for months, and then go into bear market areas.
I remember you predicted april for a correction. I believe you will be right. One thing is for sure IMO, is the leadership will have to change to move this market upwards. We cannot go much higher with the industrials leading the way. Tech has to lead the way up.
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Registered User
Joined: 12/19/2004
Posts: 457
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FWIW,
I think we are closer to a major top, although the first leg will fool a lot of bears. This market is on old legs, so to speak. With interest rates rising globally, I believe it is the hope that the Fed will stop very soon that is keeping financials up, and the sentiment bullish. When the market finds out they are mistaken, and see rates go over %5, then we will begin to see some pain.
What cannot go on for very long is a rally in commodities (particularly gold) and financials.
Yields are rising, curve is flat, various sectors of the housing market (one of the few job producing sectors of the economy) are showing strain.
Risk premiums are abnormally low. The yield on Brazil govt. bonds are less than 200 basis points above U.S. treasuries, when I checked last week.
There appears to be only one way for interest rates to go--and that is up. Obviously, this drives the values for stocks down.
Why invest in stocks when you can get 5% on your cash?
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Registered User
Joined: 12/8/2004
Posts: 1,301
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I really believe this is the beginning of the correction. Today I closed all of my longs with the exception of TALX which is holding up fairly well today.
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Registered User
Joined: 12/8/2004
Posts: 1,301
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If we are just in a correction this is where it is likely to go.
sp-500 1256-1262
nasdaq 2193-2214
dow 10459-10560
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Registered User
Joined: 2/7/2006
Posts: 218
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yea unless this iran thing escalates and we are fighting 2 wars...not good for the markets...oil sky high...
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Registered User
Joined: 12/8/2004
Posts: 1,301
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Well now I am almost certain this is the beginning of the correction.
As of yesterday there were 211 sectors over their 50 day moving average and right now there are 145.
In the last 2 days the 17 day ma had 201 sectors above and now it is only 33.
This seems to be broad based and I bet it will be worse by the end of the day.
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Registered User
Joined: 12/19/2004
Posts: 457
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I'm looking at the SP SPIDER sector ETF's, and what I find interesting is that despite the debacle in the Nasdaq today, most of the decline is related to biotech and healthcare, not computer stocks.
Semiconductors, Apple, etc. had been holding up fairly well when I checked.
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Registered User
Joined: 12/8/2004
Posts: 1,301
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I'm looking at FD right now. The last trade of the day was for 7 lots of 754,700 shares at 74.15. That is over 5.2 million shares yet the total volume was shown to be 2,787,900 at least as of right now. I wonder what that means?
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Registered User
Joined: 12/8/2004
Posts: 1,301
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Heck, now there are 8 lots of 754,700. I better see 6 million shares on the open tomorrow.
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Registered User
Joined: 12/8/2004
Posts: 1,301
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In the last 3 days there were only 14 sectors out of 239 that were up in price.
Oil and gas refining
aluminum
independent oil and gas
major integrated oil and gas
music and video stores
oil and gas drilling
energy
industrial equipment wholesale
industrial metals and minerals
waste management
farm machinery
appliances
sporting activities
trucks and other vehicles
since 5 of those were oil related, that leaves only 9 of 239.
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Registered User
Joined: 12/8/2004
Posts: 1,301
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Ok someone please explain this. There were 6 million shares traded as the last trades of the day for FD yesterday at 74.15. None of it showed up in the volume yesterday or today. Is it safe to assume that the market maker sold them and returned it to the general float?
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