Tuesday, September 25, 2012

Usually I’m posting market outlooks sporadically on Twitter, Google Plus, or Stock Twits. But character restrictions are a bit stifling so I decided to present my picks, strategies, and forecasting here – in my Trade Trekker blog postings.

Starting with the big picture story I originally posted last month, we are at the last Fibonacci level on a monthly basis going back from the all time highs back in October 2007. Even though I’m generally more of a  bear than a bull, I have faced reality that it is entirely possible to see a move to 1576 or higher. All this despite the fact we may get there on the back of sub par GDP and anemic unemployment.

The chart above shows whenever we get to this 78.6% Fib level, 1576 becomes a magnet. The 1404.05 line is the TDST resistance line developed by Tom DeMark. Those are important markers for gauging continued moves.  Here’s the catch. Even though we have bullish considerations, a failure to reach 1576 indicates a breakdown and a HUGE drop is highly probable.

At which point does this HUGE drop become possible is to look is to take a closer look at the daily chart. I posted this the following last week but it tells the story that any close below 1430 is quite bearish and raises the probability that the highs are in for the year and raises the possibility the highs are in for a long long time.  For now, I’m giving the benefit of the doubt to the upside as I remain long. Therefore, with the cash SPX closing at 1441.59, we are in the buy-on-the-dip territory which I formally place between now and 1430. A close below 1430 gets me back to neutral.

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