trendmagic
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Current Market Outlook 08/23/2006: , courtesy of: Our Website
DOW JONES BOTTOM SPOTTER: SHORT
Today was the day . It was earlier than we expected but we got a sell signal on this market . The DOW Jones confirmed this on a closing basis as well . We saw a couple of things that made us flip our position to short today .
1) Our indicator went on a sell signal today for the first time since the bottom in July .
2) Many indices created a bearish reversal candlestick today . The NYSE, IJR, IWM, and a couple other took out yesterdays highs and closed below yesterday's lows . This is not in the true sense a "bearish engulfing" candlestick pattern, however, it is bearish nonetheless . Volume was again light and the indices had nothing doing above yesterday's highs .
3) Seasonality is very bearish the last week in August and into the mid-october timeframe .
4) The Nasdaq, which we consider the leader of this market, is just not materializing the rally we were looking for . This index has set up a pattern of lower highs all the way down from the May top . On a bigger picture view, the nasdaq could be setting up a bear flag from the June lows . This would give us much lower targets, however, we are not sure how low as of yet .
With all these factors present, the market is the market and will do whatever it will do . The head and shoulders bottom pattern is still present and there is strong support at 1290 on this market . If this holds, higher targets may be in order for the short term . We are taking the odds that this market will not rally much further from here based on the reasons listed above .
As we have maintained for a couple weeks now, the 4 and 8 year cycle lows are due this fall . We fully expect the markets to work their way down to substantially lower targets before embarking on a viscious bull run this fall, all the way into next year . Our first target will be the July lows . We will see how the market reacts there .
As for our portfolio, we liquidated all long positions today intra-day as per our intra-day alert . We still continue to hold our gold positions however which continue to perform well . However, we do not like the false break through the neckline of the inverted head and shoulders pattern this morning . We need to keep a close eye on this pattern .
Intermediate Term Prognosis:
On a more intermediate term basis, the S&P 500, Dow Jones, and NYSE have all maintained a very shallow retracement of the rally off the July lows . This bodes well for the near term . We are keeping a close eye on the SP500 for clues as to the near term direction of this market . The S&P has traced out an inverted head and shoulders pattern with a neckline at the 1265 level which we are currently resting on . A successful test of 1265 would indicate a target of around the 1325 to 1335 area on this market . We will trace this market out day by day to ascertain an appropriate area to get out of our longs and get short .
We continue to feel that a rally may take us into the end of the month or near it before we see the bigger hands step in and provide downside pressure onto this market . As we have stated in the past, there are bigger cycles in play here which will most likely take us much lower into the 4 year and 8 year cycle bottom .
TrendMagic
DOW JONES BOTTOM SPOTTER: SHORT
Today was the day . It was earlier than we expected but we got a sell signal on this market . The DOW Jones confirmed this on a closing basis as well . We saw a couple of things that made us flip our position to short today .
1) Our indicator went on a sell signal today for the first time since the bottom in July .
2) Many indices created a bearish reversal candlestick today . The NYSE, IJR, IWM, and a couple other took out yesterdays highs and closed below yesterday's lows . This is not in the true sense a "bearish engulfing" candlestick pattern, however, it is bearish nonetheless . Volume was again light and the indices had nothing doing above yesterday's highs .
3) Seasonality is very bearish the last week in August and into the mid-october timeframe .
4) The Nasdaq, which we consider the leader of this market, is just not materializing the rally we were looking for . This index has set up a pattern of lower highs all the way down from the May top . On a bigger picture view, the nasdaq could be setting up a bear flag from the June lows . This would give us much lower targets, however, we are not sure how low as of yet .
With all these factors present, the market is the market and will do whatever it will do . The head and shoulders bottom pattern is still present and there is strong support at 1290 on this market . If this holds, higher targets may be in order for the short term . We are taking the odds that this market will not rally much further from here based on the reasons listed above .
As we have maintained for a couple weeks now, the 4 and 8 year cycle lows are due this fall . We fully expect the markets to work their way down to substantially lower targets before embarking on a viscious bull run this fall, all the way into next year . Our first target will be the July lows . We will see how the market reacts there .
As for our portfolio, we liquidated all long positions today intra-day as per our intra-day alert . We still continue to hold our gold positions however which continue to perform well . However, we do not like the false break through the neckline of the inverted head and shoulders pattern this morning . We need to keep a close eye on this pattern .
Intermediate Term Prognosis:
On a more intermediate term basis, the S&P 500, Dow Jones, and NYSE have all maintained a very shallow retracement of the rally off the July lows . This bodes well for the near term . We are keeping a close eye on the SP500 for clues as to the near term direction of this market . The S&P has traced out an inverted head and shoulders pattern with a neckline at the 1265 level which we are currently resting on . A successful test of 1265 would indicate a target of around the 1325 to 1335 area on this market . We will trace this market out day by day to ascertain an appropriate area to get out of our longs and get short .
We continue to feel that a rally may take us into the end of the month or near it before we see the bigger hands step in and provide downside pressure onto this market . As we have stated in the past, there are bigger cycles in play here which will most likely take us much lower into the 4 year and 8 year cycle bottom .
TrendMagic
