When I wrote of the bear trap last week, I meant that: a trap for the bears. I must have written it poorly, since many of you interpreted it as a bull trap - a trap for the bulls. A similar trap was sprung in Oct02, when Prechter believed in a much deeper fall that never came, and the snap back rally caught the shorts. Now he believes in a fake rally and deeper drop, freezing the shorts. A week later, Neely still expects a sharp 4-5 day rally any day, and the STU still expects a sharp wave 4 rally to happen in their turn window of tomorrow (Mar10) thru Mar19. Yet the market continues its slide downwards, with several really nasty 90-90 days. A very hard market to trade, particular for bears who lightened up awaiting the rally and a new shorting moment. The bulls have steadily moved to the sidelines, and I daresay many have sworn off equities for a while. Sign of a bottom coming to be sure, but with the bears waiting to snatch a new short after a rally, the bottom slowly fades even lower. We are in that range, from Dow7400 to Dow4000, with no really good support level or stopping point. See my last post.
Any guidance from my readers? Do we buy the Neely/Prechter view, or is something else going on?
I keep thinking IBM is the canary here + the Comp is just breaking lower. So my target of 4500-5000 is a real possibility. Obama is rumored to pick R. Cohen for USUST whick is the top corporate financial attorney in the country. I doubt he will be against the shareholders....so more of the same...dripping blood all the way down.
Posted by: Wavetrader | Monday, March 09, 2009 at 08:16 PM
We are going to start strong this morning if the overnite's are any indication.
Posted by: Pathrick Neid | Tuesday, March 10, 2009 at 05:10 AM
Pre-open, the financials have jumped on news that CITI has been profitable and the Dow futures are up over 100. This could be the 4th? We'll find out if it holds through the close.
Posted by: rc | Tuesday, March 10, 2009 at 05:14 AM
If you read www.carolan.org - he says that an 11:45 close over 688.75 will signal that the short squeeze is on.
Thanks for this blog and all of the comments.
Donna
Posted by: Donna Kline | Tuesday, March 10, 2009 at 05:48 AM
From what I see RIGHT NOW, the Dow could possibly spike up to 7100-7135 today before plummeting and closing DOWN for the day; I've got a Limit Sell order on three Dow Futures contracts at 7099...we'll see what happens.
Posted by: Genesis | Tuesday, March 10, 2009 at 07:15 AM
This will be a "less-than-72-hour" 4th wave...watch.
Posted by: Genesis | Tuesday, March 10, 2009 at 07:34 AM
Last Friday, at 3:00 and again at 3:30, computer 'buy' programs kicked in at S&P 668. This area represents support going back to 1996. For the week prior to that, important indicators, of mine, were showing more fear than any other time during the decline since 07. Today I have other possitive signals.
Will this become a 'buy' signal? Don't know! Starting to look like a suspect, though.
Ned
Posted by: Mamma Boom Boom | Tuesday, March 10, 2009 at 10:41 AM
DJIA above 7,500 is key.
i posted that number at my wal-streetweak.com website. then someone else (McHugh? Tim Wood?) said that the key hurdle for the DJIA was 7,460.
then a Spring Rally could possibly begin.
Fiat metals and stocking up on food are the next big things.
da bear
Posted by: da bear | Tuesday, March 10, 2009 at 12:04 PM
Genesis, I tend to agree. Gap-up on a piece of news is likely to be retraced in next few days.
Posted by: crashish | Tuesday, March 10, 2009 at 12:40 PM
>>Will this become a 'buy' signal? Don't know! Starting to look like a suspect, though.<<
Do we have ignition? (conformation)
Posted by: Mamma Boom Boom | Tuesday, March 10, 2009 at 02:50 PM