Thursday, March 19, 2009
And just when you think it is SAFE, what happens? ? ?
W.o.W, WALL of WORRY, has it gotten too comfy yet? Should we be scared? Well how about VIGILANT, instead of scared.
ABOVE is a chart from the" FLAWLESS" series, with some markers removed to improve its viewing characteristics.
So now we DONT think we will crash straight to 5000 HELL in a handbasket, at least not yet !
But the 3 of the 3 Banded Oscillators in in Extreme Over Bought positions. Two of these are heeling over like a sailing ship with too much ice overweighting the rigging and superstructure, and the MACD is de-accelerating.
Psychologically everyone is starting to breathe more easily, and is a wee bit complacent.
So as both Stalin and Napoleon said, the more dangerous time in a war, was after it seemingly was won. I submit, that is the case here for a correction either NOW or very shortly.
No matter what you follow, be it Bank Indexes, Liquidity Indexes, or phases of the moon, I suggest you take a deep and serious look at them RIGHT NOW, and plan accordingly.
The Wilshire 5000 [$WLSH] is as representative as it gets, of the entire market, so when it speaks, I heed its words. You might be well advised to observe them also.
Friday morning I will be exploring my hedge options for a number of issues. Its it conceivable that the DJ breaks under 6400 ? YES. Likely, ?? Probably not. FOR CERTAIN? no one knows, all we have is hints and clues. My best guess is that after all the dust clears here, the rally will still be alive in one form or the other. Be that as it may, take this call for VIGILANT ACTION FWIW. ! ! ! Guessing at reversal levels, I'd say that you could expect a correction to stop at a downside level of 6800 on the DOW and perhaps 7300 on the $WLSH. GIVEN volatility we have now, that could be ONE DAY's worth of a hellacious move, and surprise no one. I would not be surprised to see it stop in the 7K region of the DJ and 7.5 region of WLSH.
To put it all in perspective, BOTH of these AVERAGES are bouncing btwn their 20 & 50 DMA's, so it would be logical that each of those would provide an intial Point of Reference.
For that reason, I'd expect the bounces in that area, but re aware a DOWNSPIKE, designed to scare you out of your liver, could take the DOW down to its old low for a test, and the same for the WLSH, BUT, that would likely be INTRADAY, if at all. IF it closed under the old low, well that'd be a signal, and a bad one.
Tight lines to ya, and if ya need luck, well "break a leg" as they say in show biz and hope its sumptin big and hairy.
Good Luck All