Monday, May 14, 2012

Torture, Capitulation, Rally

I can not characterize this stock market action by any other words. Slow-motion train wreck on low volume, which will be followed by a fall off the cliff, and then we will rally. I am seeing no bulls on TV any more. Everyone is quiet, leery calm. I want to see VIX shoot to 23. I want to see big volume spike on the move below 1333 on SPX futures, a quick whoosh down. I want "decoupled" bulls washed out, as they doubt their ridiculous theory. Next 24 - 48 hrs are important...
And then... I want to start taking shots at longs beginning around 1320 - 23 on SPX futures, and scale into longs from there. Nothing travels one way forever. Bounce should be good enough to trade. And after the bounce we will go down to test 1300 SPX cash. Nice two-way action is what I am looking for. Let's see what happens...

click on charts to enlarge


  1. Hi Market Viewer!
    Once again wanted to thank you for the insightful and beneficial analysis, you always manage to be ahead of market-driving headlines and your comments have given me upper-hand when i needed them the most. Good job - me and hopefully many more readers appreciate your effort!

    Looks like Bradley cycle and your Fib. analysis (16 March post) seems to be spot on so far - all the major EU markets peaked in March and i guess the same can be said about Asia. My cycle analysis for this year still suggests that the YTD low of 1258 SPX will be breached to the downside and volatility is likely to rise substantially somewhere during coming 1-4 m. What do you think is the likelihood of that type of scenario?You mentioned that after a decent rebound the SPX would test 1300; however what are the chances of this year's price action playing out according to Bradley Siderograph?

    Many thanks and good luck trading

  2. Roman, my view is that 1300 holds for now (even if breached by 5 - 10 points intraday). I think that we can get back to year highs on the ensuing rally, and trade in 100 - 150 point SPX range until the end of summer. Then we may retest 1300 again (perhaps between Aug - Oct) just in time for elections, based on uncertainty about fiscal cliff, followed by relief rally (post elections) to new highs into the end of the year.