Crash Starting in a Week or Two?

Hate to tell you, but it could happen. I have had a wave of work recently and don't have time to lay it out here like I'd sure like to. But we are still tracing out the exact same pattern that we did leading up to the final high in 2007. Shockingly similar. And if things continue to be shockingly similar, we would reach the final high in a week or two.

Wish I could go on, but I'm out of time. I obviously hope I'm dead wrong on this.

Rob

He Gets Out Totally

I believe the $200 million man is now out of the market, up or down. We continue to drift up. He's thinking, like I am and others, we've been going up for quite a while, the market seems tired, we're due for a down move. But that's how these rallies keep going, is thinking like that. Everything is still relatively negative. In fact, I don't talk about the Russell 2000 much because it's kind of inconsistent, but I will say that the Russell reached its most negative point of the year on Friday, with 18.66 on the positive side and 48.82 on the negative side. So even though we've been going up and up, people aren't buying it yet, which I think will send us even higher, for now.

If any of you looked at that link I had on a past post which sent you to the chart of the Dow from 1900 to present, you might have noticed a little ad in the corner of the page from some guy advertising his market software, and he was predicting the selling would start on September 30. Just looking at how long it took to reach the high when looking at what happened back in 2007, comparing it to the similar pattern I was talking about in a recent post, if we were to continue to follow that pattern, I have to say that he might have something in that September 30 prediction. I wonder what he based it on. I still watch the Bradley, although it hasn't worked well at all since the bear market started, but we do have a Bradley date on November 1. Interesting.

The $200 million man did get totally out as of Friday. The numbers for the past week in the S&P 500, which is what he exclusively plays:

Monday: 65.42/258.77

Tuesday: 68.32/253.94

Wednesday: 67.05/205.54

Thursday: 154.87/186.65

Friday: 66.28/193.48


The Nasdaq 100 numbers were getting a little high earlier in the week last week, but finished the week more negative, which is good for continuing the rally. The numbers for the past week:

1.63, 1.93, 1.83, 1.38, 1.51

Rob

He Switches to Half In on the Up Side

The $200 million man today switched to what appears to be a half-in position on the up side. The market will want to get rid of him before it moves up further. So unless he gets out of that position quickly, I would expect some sort of down activity coming up. On the positive side, the Nasdaq got more negative today, which is good for continuing this rally.

The S&P 500 so far this week:

Monday: 65.42/258.77

Tuesday: 68.32/253.94

Wednesday: 67.05/205.54

Today (Thursday): 154.87/186.65


The Nasdaq 100 numbers so far this week:

1.63, 1.93, 1.83, 1.38

Rob

Remains Half In on the Down Side

Flat to slightly down day today for most of the market. I was thinking the $200 million man might have gotten out of his half-in down position. But he's still there. So I'm mildly surprised that we didn't continue to move up, at least a little.

The S&P 500, yesterday and today:

Yesterday: 65.42/258.77

Today: 68.32/253.94

There was a bit of a move to the positive side in the Nasdaq 100 today. We went from 1.63 yesterday to 1.93 today. If this is a strong rally where we're going to go all the way to the highs in positive volume numbers, then eventually we have to get up to 2.00, then up to 3.00, and finally up over 4.00. So we would have to pass 1.93 somewhere along the way. But this seems a bit fast to get up near 2.00.

So the $200 million man made a little bit of money today as the S&P 500 went down a teeny bit. Will that embolden him to up the ante on the down side?

Rob

He's Still Half In on the Down Side

The $200 million man remained in his half-in on the down side position today, and we had a strong up day. The numbers in the S&P 500 for last week and today:

Tuesday: 67.66/172.26 (he's on the sidelines)

Wednesday: 61.93/179.68 (still on the sidelines)

Thursday: 65.09/174.54 (still on the sidelines)

Friday: 63.98/270.26 (he sees that the market seems tired, been going up for a while, so he goes half in on the down side ... we continue up)

Today, Monday: 65.42/258.77 (he remains half in on the down side, although he doesn't seem to have as much money ... strong up day)

So what do you think? Will today's strong up day scare him off, possibly yielding a down day on Tuesday? Or does he stay in on the down side and we continue up? Or maybe he goes all in, figuring you can only go up so far so fast? Nah, probably not.

The Nasdaq 100 for the past week and today, again dividing the larger number, which is the positive number, by the smaller number, which is almost always the negative number:

1.47, 1.66, 1.62, 1.55, 1.63

I would think this number would have to get up over 2.00 at a bare minimum before a top. And could we rally all the way up to the highest volume numbers that we had at the highs earlier this year, which was around 4.10, before this rally dies and we could be in for some awful times? I think there's a good chance of that, since I think there's a good chance we will rally right up to those previous market highs from earlier this year. But I'm just speculating, as usual. I definitely wish I knew the answer to that question.

Rob

He's Half In on the Down Side

When I refer to "he" in my titles, I'm referring to the $200 million man. Yes, he did go half in on the down side on Friday, and we went up some more. Things continue to be very negative, relatively speaking, so it would appear there is more to this rally. The Russell 2000 was at its most negative point on Friday, relatively speaking. The Nasdaq 100 continues to be fairly negative. And the S&P 500 continues to be negative, and now even more negative with the $200 million man going half in on the down side. So short term, I would expect us to keep rallying.

But ... below is the picture that I had linked you to in my last post. I was able to copy it in. I'm still in a state of shock from seeing this only a few days ago. To me, seeing this, it seals the market's fate. You laugh. Sorry, but that's what I think. The picture:

The classic head and shoulders pattern, otherwise known as the domed house of "three peaks and domed house" fame, stretching from the year 2000 to the present, is inescapable. Three ways I think this can play out:

We could start down any day. The pattern is there. It can go down now if it wants to.

More likely, although I definitely could be wrong, is that we rally for a while here as the market tries to punish the shorts for being right and piling on on the down side. And then the crash commences, after many of the shorts give up and get out of their down positions.

I think a third possibility is that we have an incredibly strong rally here and rally up to higher all-time highs, above 14,000 whatever it was. I say that's a possibility because the market will do whatever it takes to get rid of the shorts before going down, even sometimes breaking out of a classic head and shoulders pattern to go to a higher high on what would be the right shoulder. There is so much negativity right now. Lots and lots of people are looking at that head and shoulders and know what it signifies. So they're saying, hey, I'm going to stay out until we go to higher highs and break up this head and shoulders pattern. And so that's exactly what the market might do, then they all pile on, and that's the final high. Not a likely possibility, but a possibility.

I tried to copy in a couple pictures here, but they ended up at the very top. Just what I thought is an interestingly similar picture. The second picture from the top is this year, 2010, so far. You can see the pattern I have circled, kind of a triple low with the lowest point in the middle. I was thinking that sure looked familiar. So I looked back in my charting, and there it was. That's the picture at the top. That picture at the top is from 2007, and the pattern I have circled came right before the final rise to the final all-time high. So our final high here in 2010 might be coming sooner rather than later, after we finish out this final rally.

But I don't know. All this is just things I'm wondering about. We'll see what happens.

Rob

Scary Picture

Yes, we do appear to be in rally mode, at least for now. This could go on for a while or it could end tomorrow.

The $200 million man has been out of action so far this week. He had been in a down position at the end of last week.

The Nasdaq 100 numbers for the last five market days (dividing positive numbers by negative numbers):

1.41, 1.54, 1.43, 1.47, 1.66

So again, I am wondering if that was an important low that we had this past week or so, when the Nasdaq number got down to near even money, positive versus negative, or whether there is more to go. Obviously some day I'd like to be able to answer that based on these numbers, but I can't say right now.

I do have a very scary picture to pass along. I was wondering what the Dow was looking like in a long-term historical perspective, and I found the perfect chart, going all the way back to 1900. To me, this is an unbelievably scary picture. There it is, in all its glory, the most awful-looking giant head and shoulders you're ever going to see that we have formed since 2000. From all I learned from Jerry Favors, most of the mountain in the chart is going to come crashing down, probably starting very soon. We could go up and rally for a while. But as long as we stay below the all-time Dow high of 14,000-something, the head and shoulders will be intact, ready to explode down. It could start tomorrow, or it could start months from now. I hope and pray that I'm totally, completely, laughably wrong.

That chart is at: http://stockcharts.com/charts/historical/djia1900.html

If a total crash starts, my numbers will be useless, I'm guessing. This will be a pattern-driven thing that's going to play out no matter what the numbers are.

Rob

$200MM Half In on the Down Side

So we had the very large up day yesterday even though the $200 million man had gotten out of his short position for that day, and so he missed what would have been a very large loss. So he was probably feeling lucky. For today, he jumped back in on the short side, half in actually. And we had another nice up day.

So far this week:

Monday: 71.31/181.30 (this is the current market without the $200 million man)

Tuesday: 73.23/245.91 (he puts a little money in on the down side, turns out to be a flat day)

Wednesday: 66.83/168.19 (he gets back out, and we have a huge up day ... yes, this definitely goes against the usual concept, for which there is usually a reason ...)

Today (Thursday): 67.19/275.05

So he's about half in on the down side. What do you suppose he'll do for Friday?

The Nasdaq 100 continues to get more positive, which is fine for now. The past week in the Nasdaq 100 (positive number divided by negative number):

Monday: 1.25

Tuesday: 1.40

Wednesday: 1.41

Today (Thursday): 1.54

So was that the low this past week to the most recent move down? If so, I will be remembering that the Nasdaq 100 got down to 1.04 within days of the low.

Rob

Unexplained Giant Up Day

A very large up day today. So I figured the $200 million man must have gone all in on the down side. He was half in on Tuesday. But no, he actually got out of his down position. So things were back to where they were without him, which is extremely negative, relatively speaking. So I can certainly see us going up. But it does surprise me to see such a large up day when he has just gotten out of a down position. So I have to say I am unsure of this rally just because things don't quite make sense. The Nasdaq 100 was at its least positive reading of the year this past Thursday. And there, I'm a little surprised it didn't go negative before we reach a bottom. But overall, things are certainly negative enough to support a strong rally.

The Nasdaq 100 numbers for the last week and half, dividing largest number by smallest number, so they're all positive because there continues to be more money on the positive side in this fund, as usual, oldest to newest:

1.17, 1.29, 1.36, 1.02, 1.09, 1.25, 1.40, 1.41

Seems to be getting more positive again a bit quickly. But we'll see how this rally goes.

The S&P 500 numbers so far this week:

Monday: 71.31/181.30

Tuesday: 73.23/245.91

Wednesday (today): 66.83/168.19

Rob