Jump to content

IDS World Markets Thurs 9th October 08


Recommended Posts

  • Replies 441
  • Created
  • Last Reply

From last night's Wall Street Examiner Professional Edition- http://wallstreetexaminer.com

 

You know things are bad when a 189 point down day in the Dow feels like an up day. The market

continues to face wave after wave of forced liquidation and deleveraging. Tomorrow is the day when

the shorts could really hit the fan. Short sellers will again be allowed to attack financials. The question

is whether they will pile on, leading to an all out collapse. Then following on that, might a reversal day

be in store for Friday or Monday? That would square with the time count on the 13 week cycle, which

suggests that a cycle low should come by Monday on that cycle. On the other hand, counts indicate ..

 

Cycle based stock

screen data was mostly

stronger, with 6 of the 9

measures strengthening

modestly, one

unchanged, and two

weaker. Considering

that the numbers are

constrained to the

absolute levels which

they cannot exceed, it?s

not surprising that they

didn?t weaken from

yesterday?s record

levels. They remain extremely weak; with all 3 cycle status indications still well past the 90% sell side

level that signals maximum downside momentum. Normally such readings can lead the intermediate

price low by weeks. Tuesday was the first day all three cycles reached that level of extension. At this

point, I don?t think that the uptick in the numbers is significant. 

 

The net aggregate differential between buy and sell indications (chart below) rose from 

-2316, which was a new low in this decline and the lowest reading in the 38 month history of the

indicator, to -2158, the second worst reading ever. Yesterday, it reached the lower channel line of a

downtrend that began a year ago, and it hasn?t moved much off that line. (Text in this font is repeated

from past issues.) Reaching an extreme on this indicator is normally not coincident with an intermediate

price low. It may be a short term price low, but the final low is normally coincident with a subsequent higher

low in the indicator. That?s a process that may unfold over weeks or even several months, during which time

the market would trend lower.  ...

 

 

The cumulative line indicator (light green line) has made another new low for the 3+ year history of

the indicator. It is now approaching a trendline connecting lows in this indicator that were either

concurrent with or preceded a significant market low by several weeks. At this rate, it will only take

about 2 more days to reach the trendline. That should mark the beginning of a bottoming process. 

 

 

Third Rail? The market has now sliced through the last possible support trendline on this chart. If

they begin to separate from this line on the downside then there?s no longer a way to project support

by this method.

 

...

 

The 4 and 6-7 week cycles are in down phases due to last anywhere from 5 to 20 trading sessions,

depending on which cycle is dominant. At this rate that would be an unmitigated disaster of biblical

proportions. Even bears can only pray that the 13 week cycle intervenes and turns up, as short term

centered moving average projections are now pointing toward a low of 880 on the 6-7 week cycle.  ...

 

A 13 week cycle low is probable at any time through Monday 10/13, but the last days of a cycle are

usually the weakest. The indicators are still on the sell side, so there?s still that risk of severe weakness

continuing or even worsening over the next few days. Most of the indicators for this cycle are within a

day or so of reaching the levels reached at their 2002 lows. However, the indicator lows were reached

in July. The market rallied but retested the lows in October, and then again in March of 2003. This is

fairly typical of major bottoms. There?s no need to catch the first bottom. Let the market prove itself.

There?s always a pullback. ...

 

 

The market has established a new sharply declining 18 month cycle wave channel projection. This

channel will remain in force until the upper projection is decisively broken. The bottom of the channel

is now around 950, and the top is around 1100. A break of the lower channel line with an increase in

velocity would signal an acceleration of the crash. On the other hand, a break that holds near the line

and begins to recover late in the day should signal an intermediate bottom.  ...

 

On the equal vertical width channel chart below, the SPX has now reached the last defensible ?lines in

the sand,? below which there may be no tomorrow. Long term channel lines in the 980-990 area

represent the last major support by this method. 1025 now looks like potential resistance. There should

be support around 910, where an old trendline from the 2004 trading range extends. 

...

 

The Qs are in a headlong collapse after having taken out the bottom of the projected

18 month cycle channel. They are threatening to break a new more sharply descending projection. If

they break it, the crash will probably accelerate.

 

 

Get the news before it's news. Be prepared. Stay ahead of the herd!

Link to comment
Share on other sites

Archived

This topic is now archived and is closed to further replies.

  • Tell a friend

    Love Stool Pigeons Wire Message Board? Tell a friend!
  • Recently Browsing   0 members

    • No registered users viewing this page.
  • ×
    • Create New...