There are a number of newsletter guys worrying about the so-called summer rally, e.g. Sy Harding. I've looked at a few support levels and possibilities.
1) Sept S&P can lose its current support level, but if it violates 959 then the next stop is 950... after that, major trouble is my guess.
2) It may hold the 965 level, where there is some congestion and candle support (somewhat). The 5-3-3 hourly stochs offer some hope of a reversal around that level. There is also the wide hourly price departure from the 5-period EMA at closing, which can't be ignored. That may offer hope of a minor reversal tomorrow (provided we aren't awakened with another WCOM scandal).
A) That wide 5-period EMA departure from the hourly price action is also found on the DJIA, QQQ, IBM, INTC, GE and GM.
B) I don't know whether the Tuesday morning rally will be sufficient to jumpstart a sharp rally or THE RALLY.
Who thinks it will be option #1 (market fails to hold its support levels and falls off a cliff) or #2 market holds its current support levels, had provided an adequate re-test of the lows (formed a secondardy bottom) and is ready to roar higher shortly?
Vote #1 or #2, please.
<<I DO REMEMBER reading the New York Times business articles of that year (on microfiche) and many, many years ago I did that. From what I remember, there wasn't anyone calling for a market bottom. The tone of the financial journalism of the time was complete and utter resignation.... sort of like "What's New, the market made another low today.">>
That's why I feel we are a long way from the "real bottom". We have had and will continue to have rallies within this secular bear market. However, we can't put in a real bottom as long as there are people actively looking for it. Too much upward pressure from bottom fishers to let the market find its "real" bottom.
<<I don't see anything related to my Oct 14 Black date.>>
I just meant that, in general, your prediction reminded me of an astrologer's prediction.
<<What did he say exactly? Or what's this astrologer guru's latest prediction?>>
I have no idea.
I was right. The bottom was in 1932, a retracement to its previous bottom earlier in the century. I just can't remember if it was July or August when the market completely bottomed.
I DO REMEMBER reading the New York Times business articles of that year (on microfiche) and many, many years ago I did that. From what I remember, there wasn't anyone calling for a market bottom. The tone of the financial journalism of the time was complete and utter resignation.... sort of like "What's New, the market made another low today."
Kinda like the other side of the spectrum, emotionally, of the CNBC-TV cheerleading of 1999 and early 2000.
NO ONE WAS TRYING TO CALL A BOTTOM IN 1932.
P.S. Don't take my word for it. Jump into a library some time this summer and drag up financial articles from 1932 to 1934.. you'll be surprised at the utter lack of enthusiasm. Sort of like a boxer who's been beaten and battered near the end of the 10th round.
I vote for #2 of
<< provided an adequate re-test of the lows (formed a secondardy bottom)>>
For that, it should be similiar to 3/22/01 and 4/03/01's retest case. Market is getting more volatile these days. It took 10 sessions to achieve the retest during last spring, it might take half of that of 5~6 sessions to achieve the retest.
Better case for the summer bear rally would be a higher low than the spx 952 reaction low.
I woundn't mind if it comes to a slightly lower low of my spx target of 920, but I am hoping it can achieve that during late July 3rd to have a 3 black crows when sellers exhausted. Then the FED can easily pump it up with less liquidity during the shortened July 5th session.
Seasonality doesn't provide sufficient reason to have a major capitulation at this time. I prefer the major capitulation comes in during the weak Sep to Oct time frame, probably a black Monday on Oct 14 to setup a 4th quarter rally.
I vote #2: market holds its current support levels. The big boys (and perhaps the Fed) will have a much easier time of holding a critical line of support during a week where trading volume will be falling as the holiday approaches. I think they will buy, if they have to, and with new 401k inflows, if need be, rather than let this market totally unravel. What's that old saying? You gotta buy 'em to sell 'em?