A little hope for the bears?
Time for a cold one
Courtesy of Allan
I came across this chart today, categorize it in the "for what its worth" department:
[Click on charts for larger view]
Let’s see how the above seasonality charts compare with my own SPX chart:
Counting eight bars from the right we can see the gap-up open to a new summer high in Thursday’s first bar. But look underneath at the Elliott Oscillator. Eight bars from the right is a major divergence, not even close to a new high for the move. If the S&P breaks below 985 Monday and stays below it, we get a trend sell signal that should carry at least 50 points lower. That would coincide with a break down of the trend regression channels with even more bearish implications.
Zooming out, here is the Weekly chart with Fibonacci levels and the False Bar Stochastic:
This is where the above seasonality chart is especially poignant. Prices have engaged the first major Fibonacci level of 38.2%. A turn down here, accompanied by a break down of the regression channels and another crossing of the FBS down below it’s signal line adds up to compelling evidence of a change of trend that could lead to the initiation of the next impulsive leg down.
If this analysis sounds familiar, it is because it has been hanging around these charts for the past six weeks. The consensus of the bulls is that we are in a new bull market, that the recession is over, or about to be over, that the government has pumped enough liquidity into the system to have saved the day and that the bear market is finished and its loyal adherents, especially those like me who say the worst is yet to come, just don’t have a clue.
Remember, in March, this bearish take was the view of the many. Today, August 1, it is the view of the few, as another piece of the puzzle falls into place.
All of this is predicated upon a break below support on the above two-hour S&P chart. This has not yet occurred and unless and until it does, the trend is higher. [Ilene’s emphasis]
That’s it for a Saturday in August. It’s 110 here in the desert and about time for a cold one.
