Oyster report

[Guest]

Hello folks,

 

This morning on Crapvision-Europe they had some technical problems and almost didn't show the interview with Oyster. They finally managed to arrange a connection and have him present - but they were running out of time, so he spoke rather fast and, I think, didn't say everything he wanted to say. Also, because of the speeded up presentation, I couldn't remember everything. Nevertheless, here is a summary to the best of my recollection; Oyster, if you read this, I'd appreciate if you could correct any mistakes and omissions of mine.

 

First, he is rather bearish on the US dollar. Expects euro/dollar to reach above 1.20 (I didn't remember the exact numbers) and dollar/yen to go much, much lower, with 100 being just the first stop.

 

Then he showed a chart of the SPX in Japanese yen, demonstrating that it has already broken back inside its multi-month trading range, after the false breakout:

 

 

I'm not quite sure what was the point of this.

 

After that, he commented on the "real" SPX, starting with a weekly chart:

 

 

He pointed out that the index had almost reached its 200-week EMA and/or the 38.2% Fibonacci retracement between the all-time high and the October 2002 low. However, it has been turned back before exceeding these levels. His Elliott Wave count is shown on the chart above. He thinks that a wave C down has just started and that it will be of equal length as the preceding wave A - i.e., that it will take the SPX to new bear market lows (i.e., to 1040.3 - (1177.0 - 768.6) = 631.9). He said that if he is wrong, this will be shown by the SPX rising above the recent high (1040). However, he said, if it falls below the critical support of 965, we can kiss goodbye the hopes that a new bull market has begun.

 

He then displayed a daily chart of the SPX, with more precise support levels but, unfortunately, I don't remember it. I think it was expecting the first serious bear market rally to start at some Fibonacci retracement (38.2%, perhaps?) between the October 2002 low and the September 2003 high; possibly in the December-January period.

 

Finally, he said something about the DAX, which was similarly bearish, but I don't follow this index, so I didn't remember it.

 

While I agree with his bearish bias, I disagree with some of the details. Yes, new bear market lows will be reached - eventually. But it won't happen any time soon. After such a strong rally as the one we've had since the March lows, people will not give up easily. All those who have missed the rally will consider every pull-back as a buying opportunity. It will be a long and painful slide. On the first try, I don't think that even the March lows will be broken, let alone those of October 2002 (although I am thinking mostly in terms of the COMPX here; not of the SPX). However, given that I've been wrong in my analysis of the broad market pretty much since May, perhaps you shouldn't attach too much importance to this opinion of mine.

 

Regards,

Vesselin

 

P.S. My access to this site has been very flacky lately... :cry: Somebody between verio.net and wadoo.net is dropping packets like mad.

[Stinky]

Vesselin:

 

I am curious as to what you think may be the lowest point the SPX hits in October?

Do you think it will even fall into the 960 range?

 

Thanks,

 

Stinky

[Guest]

I am curious as to what you think may be the lowest point the SPX hits in October?

Do you think it will even fall into the 960 range?

Yes, I do. I can't be that precise as to pinpoint the low this month - but I expect the SPX to fall close to the low 900s in the October-November period.

 

Regards,

Vesselin

[Stinky]

Thanks for the response. I look forward to more of your recent thoughts and the resulting "brain dump" now that you are back from your break.

 

Stinky

[phatbubble]

thanks for the summary VB, appreciate it.

[DrStool]

Vesselin-

 

Great to have you back. Hope you are feeling better, and have caught up on all your "real work." :wink2:

 

Doc

[GregFokker]

I've missed you, Dr. B. Welcome back!

[machinehead]

Thanks for your report, Dr. B!

 

I'm not quite sure what was the point of this. [chart of the SPX in Japanese yen]

 

For non dollar-based investors, it shows that the SPX priced in their local currencies (J-yen, euros, etc.) isn't making them any money.

 

However, for those of us behind the high walls of the Homeland, the SPX priced in yanqui pesos is still our benchmark for better or worse.

 

He said that if he is wrong, this will be shown by the SPX rising above the recent high (1040). However, he said, if it falls below the critical support of 965, we can kiss goodbye the hopes that a new bull market has begun.

 

Good advice. Brute Simple TA says that if it exceeds 1040, the trend is up. If it falls through 965, the trend is down. I may forget to take my meds sometimes, but even I can follow those instructions.

[BeerMarket]

Vesselin,

I'd also like to thank you for the summary and your thoughts. As pointed out in a recent PrudentBear article posted elsewhere on this site, one difference between this echo bubble and the original may be that there are fewer people who really believe in this bubble, they're just playing it for all it's worth. If that's the case the drop could be quicker. We'll see I guess.

[Hiding Bear]

thanks for the summary VB, appreciate it.

I second that.

 

Here in the US, the networks have decided that viewers are apparently not sophisticated enough to get the more thorough coverage of business - like that Oyster interview. Even Bloomberg TV during Euro-hours is better than the US daytime version.

[BigWave]

Tanks Vess..Good to have you back.

[Guest yobob1]

After such a strong rally as the one we've had since the March lows, people will not give up easily. All those who have missed the rally will consider every pull-back as a buying opportunity. It will be a long and painful slide.

 

As you well know I am not a technician. I am however a student of human behaviour having had to deal with these beastly animals at the retail level for the last 35 years. What you propose is one possible reaction. There is another to consider however. People's memories tend to revert to their most recent. The memory of 2002 is a lot fresher than the memory of 1999. Triggers could get pulled a lot quicker if a whiff of fear is induced. Given margin levels rising to record highs(higher than 2000) on the Nasdog, cascading is a possiblity that shouldn't be ignored.

 

Is it melting up there yet? We're gawd awful hot here. Global warming sucks unless you're an Alaskan or living in similar latitudes.

[Guest]

He said that if he is wrong, this will be shown by the SPX rising above the recent high (1040).

Well, I guess he was wrong, then? :cry:

 

At least I'm in good company.

 

Regards,

Vesselin