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Here’s a 6-month shot of the S&P500 futures:
Source: Interactive Brokers
Looks like another good short set-up here, using a couple of points over today’s high as a stop and 1055 as a target (with much greater bearish potential of course). Like many bears, I’ve been expecting the 2009 rally to peter out since summertime, and I’ve been continually surprised by the stock-buying public’s recklessness, delusion and plain stupidity as evidenced by a PE ratio well over 100 in the face of 10%+ unemployment, shrinking credit, and accelerating foreclosures and bank failures.
That said, the market since summer has given us a series of fairly clear short-term sell signals and has obeyed them with a series of 4-6% declines. Unlike previous rallies that powered through resistance into solid new highs, the rally since the latest interim bottom (November 1-2) has stalled out well within the price range of the previous top (mid-October). Not only that, but the distribution (choppy) pattern within this three-week plateau has exhibited a much wider range than previous ones. Might this instability indicate a pending phase shift, such as when a top gets wobbly before toppling over?
Oil
I want to show some basic charting here with crude, which is supposedly falling because of the supply report today, an explanation that I consider hogwash. Rather, the chart offers some examples of a very simple sell signal: the broken trendline. Yesterday’s signal was classic: it broke a very clear uptrend at a couple of different degrees, attempted a re-test, then fell hard.
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Here in the 2-day view you can see the smaller trend and how its break lead to the break of the larger one:
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This reminds me of last week’s mini stock panic, which was supposedly because of Dubai World. Funny thing is, as EWI noted, stock futures made their high a few hours after Dubai made its announcement.
Aki_Izayoi
December 3rd, 2009 at 5:08 am
Here is another sentiment indicator:
http://www.gallup.com/poll/124247/Americans-Rate-Lives-Hurting-Work.aspx
Perhaps the happiness set point theory at work? Perhaps once the shock was over people reverted to their normal happiness levels?
Well, it seems we are almost ready to short.