Baby Boomers Cashing In. So What?

I almost forgot to point out for you this column by Mark Hulbert in The New York Times May 27 Sunday edition (subscription required).

In it Hulbert observes that more than a few people have predicted a multi-decade bear market ahead for US stocks because the baby-boomers will be cashing in their retirement nest eggs.

But Hulbert counters this view with the results of a recently released economic study by three economics professors. They are J. M. Poterba (M.I.T), S. F. Venti (Dartmouth), and D. M. Wise (Harvard). Wise was a friend of mine when we both were in graduate school and I have a lot of confidence in his work. Their paper can be found here.

In this paper the three authors argue that the total of 401(k) assets plus corporate pension plan assets will in the year 2040 represent a significantly bigger fraction of that year's Gross Domestic Product than is now the case in 2007.

I think this punctures the bear balloon based on any baby-boomers asset bust. It is also consistent with the long term view I expressed here a short while ago.

All the Gains, Without Gurus

This was the heading of a front page, above-the-fold story by Greg Burns in the Chicago Tribune this morning. It was accompanied by a chart showing the cash S&P 500 at a new record close yesterday, higher than the highest close recorded at the 2000 top.

(I can't show you an image of the front page because the Tribune's web site didn't post this image correctly today. )

A few days ago I also commented on stock market sentiment as evidenced by a front page story in The Wall Street Journal. My reaction to today's Tribune story is similar. The story certainly shows a growing awareness of the bull market in stocks (which is approaching its five year anniversary). It will also encourage the emergence of bullish attitudes. As such it is a small piece of evidence that the market is approaching a top of some significance, but I don't see it as a table-pounding warning of an imminent top. There has to be much more media commentary along the same lines first (Jay Leno, where are you?).

I think my caution about the significance of this story is emphasized by this Burns' observation: "In fact, the bull run of today has failed to generate anything approaching the fervor of the late 1990s, when the dot-com boom made stock-picking a national pastime."

All in all I see this story as laying part of the foundation for a significant top later this year (July or late October ) but I also take if for evidence that the drop from any such top will be limited to 15-20% in the averages.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the June S&P futures and the QQQQ's. The chart for the Spiders is very similar to that of the futures if you divide the futures price by 10. I last commented on these markets here.

Contrary to my expectation the futures blew right through 1525 resistance after the release of the Fed minutes yesterday. I now think that they will reach the 1543 level (154.30 in the Spiders) and then drop to 1519 or so. After that another rally to new bull market highs should begin.

The outlook for the Q's is similar: a stall near 47.80 followed by a drop to 46.70 or so. Then a rally to 49-50.

Guesstimates on May 31, 8:50 am ET

Spiders - June S&P Futures: The 152.30 resistance level in the Spiders was broken decisively yesterday after the release of the Fed minutes. I do not think this market has much left on the upside over the next few days since the 154.30 level is also strong resistance. Similarly, the futures should stop near 1543 and begin another 20-30 point reaction.

QQQQ: The Q’s will probably bounce off of the 47.80 level and then react a point or so.

TLT - September Bonds: I think that this market is headed for 107-16. Resistance above the market is at 109-24. TLT will follow the trend in the bonds and will probably drop to 85.00.

September 10 Year Notes: The notes are headed for 104-20. Resistance above the market is at 107-08.

Euro-US Dollar: An extended decline is underway. Initial downside target is 133.50 but I think that the market will eventually drop to 125 or lower. Meantime resistance is at 135.40.

Dollar-Yen: The yen is headed for 123.50. Support is at 121.10. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – July Crude: I think XLE is making a top near 68 and that OIH made its top near 173. The next significant move in both will be downward. USO should bounce off of resistance near 50.60 and then drop to 45 or lower. July crude has completed a rally phase and is now headed down to 55.00 and eventually lower than that.

GLD - August Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. August gold should hold resistance at 696 and drop below 600.

SLV - July Silver: SLV is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Next upside target is 503 while support is at 478.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the June S&P futures and the QQQQ's. The Spider chart looks nearly identical to the S&P chart if one divides the price level of the S&P's by 10. I last commented on these markets here.

I have been expecting a three phase drop from 1535 in the S&P's down to the 1500 level. It looks to me like the second, upward, phase of the correction has just been completed. So I now think the S&P's are about to drop to 1500 or so and the Spiders to 150.00.

The Q's should be headed downward also and I have lowered my downside target slightly from 45.70 to 45.50.

Tale of the Tape

LEADERS:


GOOG: Support at 478. Next upside target is 503.

IBM: The 103 level is support and 115 is the next upside target.

GS: Resistance is at 233 and I expect the market to break to 213 or so. After that a move to 250.

CME: I still think a drop to 487 or so is likely. From there I expect to see a rally at least to 560.

MO: Support is at 68. Upside target is 75.


OF INTEREST:


BIDU: Support is at 123. Upside target is 150.

CSCO: Support is at 25. Next upside target is 33.

AAPL: Support is at103. Upside target is 140.

MSFT: Support is at 26.50. Next upside target is 33.50.

ICE: I now think the trend is up and that ICE is headed for 175. Meantime support is at 134.

NYX: I still think NYX will drop a little below its recent low at 79.31, this time finding support around the 77 level. After that a rally to 115 will become likely.

NMX: Lower tops show increasing weakness. I think NMX is about to break to 107.

PFE: Support is 25. Upside target is 30.

AMGN: Downside target is 50.

SHLD: I think SHLD is about to drop a little below initial support at 175 but it should hold the 172 level . Upside target is now 215.

KFT: Support is at 30. Next upside target is 39.

AMZN: Amazon should stall temporarily at 67 and react down to 63 or so. After that look for a rally to 76.

EBAY: Support is at 31.50. Market should reach 43 in a few months.

WMT: We have seen a third lower top in WMT so I think it is headed for 37.

Guesstimates on May 30, 8:50 am ET

Spiders - June S&P Futures: The 152.30 level is still resistance above the market in the Spiders while 1523 is resistance in the futures. I still think the Spiders will drop to 150.00 and the futures to 1500 before a rally into the 155-157 range can start.

QQQQ: I am raising my downside target for the Q’s from 45.00 to 45.70. The next upward swing should carry the market to 49.00.

TLT - June Bonds: I think that this market is headed for 107-16. Resistance above the market is at 109-24. TLT will follow the trend in the bonds and will probably drop to 85.00.

June 10 Year Notes: The notes are headed for 104-20. Resistance above the market is at 107-08.

Euro-US Dollar: An extended decline is underway. Initial downside target is 133.50 but I think that the market will eventually drop to 125 or lower. Meantime resistance is at 135.40.

Dollar-Yen: The yen is headed for 123.50. Support is at 121.10. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – July Crude: I think XLE is making a top near 68 and that OIH made its top near 173. The next significant move in both will be downward. USO should bounce off of resistance near 50.60 and then drop to 45 or lower. July crude has completed a rally phase and is now headed down to 55.00 and eventually lower than that.

GLD - June Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. June gold should hold resistance at 696 and drop below 600.

SLV - July Silver: SLV is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Next upside target is 503 while support is at 478.

Oil, Oil, Toil, and Trouble (with an apology to Shakespeare)

I think even the three witches of Shakespeare's "Macbeth" would find these Sunday and Monday front pages of the Chicago Tribune interesting. I last commented on public opinion in the crude oil market here.

Over the years I have found that semiotics (the interpretation and theory of signs) is an essential incredient in understanding the "contrary opinion" implications of news and opinion found in the Main Stream Media. It is often not the underlying logic and ostensible purpose of what is said that is important. Instead, it is the emotional coloring of the words, phrases, and sometimes even the associated layout, color scheme, and pictures that matter. These are the signs and emotional code that are the keys to unlocking the status of public opinion as reflected in the media.

On May 27 and 28 the Tribune ran a two part series "Keeping the Oil Flowing". Even the title of the series evokes a worrying possiblity: could the oil stop flowing?

The first scan above this post is the Sunday front page. Notice the headline; it starts with the word "risky" and ends with the phrase "juggling act". The subheading describes the oil business as a "high stakes gamble" where even a pinhole leak in a pipeline can cost consumers billions at the pump. The bottom left diagrams are headed "BP's Trifecta of Trouble". YIKES !!!!

The second scan above this post is the Monday front page. The headline starts with the word "Troubles". The picture below it shows an oil platform listing severely at sea, a very dramatic photo indeed and not one calculated to inspire confidence in the oil industry. The article itself several times cites high costs and risks associated with oil discovery and extraction and points to troubled and expensive projects whose payoffs are still unrealized.

There can be no doubt that at the emotional level this series is written to inspire fear and apprehension about our oil and gasoline supplies. Implicitly it predicts and /or encourages higher prices for both. But commodity price booms reach their peaks when fears of shortages prevail. I think these two front page articles in the Tribune predict an imminent top in oil and gasoline prices.

Guesstimates on May 29, 8:50 am ET

Spiders - June S&P Futures: The 152.30 level is resistance above the market in the Spiders while 1523 is resistance in the futures. I still think the Spiders will drop to 150.00 and the futures to 1500 before a rally into the 155-157 range can start.

QQQQ: I am raising my downside target for the Q’s from 45.00 to 45.70. The next upward swing should carry the market to 49.00.

TLT - June Bonds: I think that this market is headed for 107-16. Resistance above the market is at 109-24. TLT will follow the trend in the bonds and will probably drop to 85.00.

June 10 Year Notes: The notes are headed for 104-20. Resistance above the market is at 107-08.

Euro-US Dollar: An extended decline is underway. Initial downside target is 133.50 but I think that the market will eventually drop to 125 or lower. Meantime resistance is at 135.40.

Dollar-Yen: The yen is headed for 123.50. Support is at 121.10. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – July Crude: I think XLE is making a top near 68 and OIH near 173. I think the next significant move in both will be downward. USO should bounce off of resistance near 50.60 and then drop to 45 or lower. July crude has nearly completed a rally phase which will end at a lower top near 68.00.

GLD - June Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. June gold should hold resistance at 696 and then drop below 600.

SLV - July Silver: SLV is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Next upside target is 503 while support is at 466.

China Bubble

There has been lots of talk and commentary about a stock market "bubble" in China. The chart you see above comes courtesy of Bloomberg and Morgan Stanley. It is a daily chart of the CSI 300, a cap weighted index of Chinese A-shares listed on the Shanhai or Shenhzen stock exchanges.

The one thing I know about bubbles is that they inflate far beyond any reasonable expectation. I rembember the 1980's when the Japanese stock market's Nikkei 225 index ralled from 6000 to 39000. The problem was that the Nikkei had already rallied from 1000 to 6000 during the 1974-1980 period and so the market already looked like a bubble in 1980. But that didn't stop the Nikkei from rallying another 650% over the next 10 years. People were crying "bubble" all the way from 6000 to 39000.

So I think something similar is afoot in China. To be sure, every big break in the CSI 300 index will encourage a sympathetic break in stock indices all over the world. So it makes sense to keep an eye on the CSI 300. However, I don't think this China bubble is anywhere near the popping stage. Indeed, I think it quite likely that we shall see the CSI 300 trade above 20000 over the next 5 years.

In the meantime I see short term resistance near the 4135 level which is the 5 and 1/8 multiple of the 2006 low at 807 as shown on Morgan Stanley's chart. The break from 4135 will probably be short and quick and will carry the average down to 3500 or so.

Gold and Silver

Here are weekly charts of the Streettracks Gold Trust and the IShares Silver Trust. If you multiply the price of each of these trusts by 10 you get the current spot price of the associated metal. I last commented on these markets here.

The bull market that began in 1991 in silver from the 35 level and 1999 in gold from the 25 level reached a high point last year at 152 in SLV and 72 in GLD. After a sharp, one month reaction both markets have rallied to approach their 2006 high points.

These charts remind me very much of the price action in the US stock market near the bull market top which occurred in 2000. This is the third chart above this post. Note that the cash S&P made a high at 1552 on March 24 of that year, then broke sharply for about month to 1333, and then rallied in a choppy fashion to make a slightly lower top on September 1 of that year

near the 1530 level.

I think that GLD has begun an extended drop that will carry it to the 48 level and that SLV will drop to 85 or so during that same time. I also believe that gold and silver will evenually make it above their 2006 highs but those new high levels will probably not be reached until 2009-10.

Guesstimates on May 25, 8:50 am ET

Spiders - June S&P Futures: The 152.50 level is resistance above the market in the Spiders while 1525 is resistance in the futures. I still think the Spiders will drop to 150.00 and the futures to 1500 before a rally into the 155-157 range can start.

QQQQ: I am raising my downside target for the Q’s from 45.00 to 45.70. The next upward swing should carry the market to 49.00.

TLT - June Bonds: I think that this market is headed for 107-16. Resistance above the market is at 109-24. TLT will follow the trend in the bonds and will probably drop to 85.00.

June 10 Year Notes: The notes are headed for 104-20. Resistance above the market is at 107-08.

Euro-US Dollar: An extended decline is underway. Initial downside target is 133.50 but I think that the market will eventually drop to 125 or lower. Meantime resistance is at 136.70.

Dollar-Yen: The yen is headed for 123.50. Support is at 118.40. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – July Crude: I think XLE will stall near 68 and OIH near175, both new bull market highs. I think the next significant move in both will be downward. USO should bounce off of resistance near 50.60 and then drop to 45 or lower. July crude has nearly completed a rally phase which will end at a lower top near 68.00.

GLD - June Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. June gold should hold resistance at 696 and then drop below 600.

SLV - July Silver: SLV has bounced off of resistance near 141 and is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Next upside target is 503 while support is at 456.

Does This Bull Have Legs ???

Here is a scan of the top half of yesterday's front page of The Wall Street Journal. The headline highlights "optimists" who say that this bull market has legs, i.e. that it will go on for several more years and carry prices much higher than they are now.

Some of you are wondering whether this is the proverbial "kiss of death" for the bull market which started in 2002.

My own view is that this headline is unusual and does not reflect the current state of market sentiment. Reasonable people can differ with my assessment of course. But based on 40 years of applying contrary opinion analysis to the markets I think I would have to see many more articles in the same spirit as this one before I could conclude that public sentiment about the stock market's long term prospects is bullish.

Nobel Laureate Vernon Smith makes an important point in this story. He observes that in his experiments and in his analysis of past bubbles, "...once investors inflate a bubble [as they did in 1999] and endure a crash [2000-2002], they are unlikely to repeat this mistake until memories fade. " A lot more novices have to get interested in stock market investing before a new bubble can inflate. This process generally takes about a generation (20 or so years) to complete.

I entirely concur with his views. After the 2000-2002 bear market I thought that stock prices would remain essentially flat for 10-15 years as they did during the 1966-1982 era. But as prices rallied from their 2002 bear market lows it became apparent to me that the people who were hurt by the 2000-2002 crash were staying out of the market entirely or were hoping for a repeat so that they could avoid it and then buy at the bottom.

Partly for this reason I have completely reversed my very long term views about the market. I now think that the 2002 low was the start of a bull market that will probably carry on at least 15-20 years and multiply the averages several times. The next 15 years will be very much like the 1982-2000 and 1949-1966 episodes in US stock market history. Of course during this mega upmove there will be the occasional 20-30% drop in the averages. In fact I suspect we will see such a drop from a top made sometime this year. But every such drop will be a huge buying opportunity.

My opinion is that, if you are an investor who has to make only one asset allocation decision now, you should put all your money into the US stock market. Then throw away the account statements you get for the next 15 years and do something productive with your life. At the end of this time I think you will find yourself much weathier than you ever imagined possible and will have done far better in the markets than most people who pride themselves on their market smarts!!!

High Gas Prices Here to Stay ?

This is a "contrary opinion" follow up to yesterday's post on crude oil. Above this post you will see a scan of the front page of today's edition of the New York Times. The lead story above the fold on the left has as its headline "Oil Industry Says Biofuel Push May Keep Gas Prices High".

When the New York Times is encouraging its readers to believe that gasoline prices are on a premanently high plateau (or even going higher) my bearish nose starts twitching. And when the Times is joined by Jay Leno making jokes on the Tonight Show about high gasoline prices I become convinced that the next big move in crude oil and gasoline will be downward from current levels.

Advancing Issues

Here are charts showing the daily count of the number of issues traded on the New York Stock Exchange which advance in price. The pink line on the first chart shows the 5 day moving average of this number while the red line on the second chart shows the 10 day moving average. I last commented on this indicator here.

The striking thing about both these charts is the steady progression of lower highs in the moving averages which started to develop in early April and which has accompanied the movement of the Dow and the S&P 500 to new high ground for the past 5 years. I tend to take divergences such as this one seriously only after the market has gotten close to a reasonable price target. In this previous post I explained why the 155o level in the cash S&P was a reasonable price target for the advance from the March lows. This average is less that 25 points from this target so it is time to take bearish divergences seriously.

This is one reason why I am expecting the Spiders to drop to 150.00 and the June futures to drop to 1500 before another upmove can start.

But it is important to note something else about these charts. Both moving averages are already close to "oversold" levels that normally terminate reactions within an uptrend such as the uptrend which started from the March 2007 lows. It won't take much downside pressure to move both moving averages to "oversold" levels. This is one reason why I think the reaction from current levels will be limited in scope and will be followed by a move to new bull market highs.

Guesstimates on May 24, 8:50 am ET

Spiders - June S&P Futures: I think that 153.50 in the Spiders is strong resistance and that the market will soon drop to 150.00. Resistance in the futures is at 1535 and I expect this market to drop to 1500 or so. After this upcoming reaction is complete the Spiders should rally into the 155-157 range.

QQQQ: I think this market will soon break to 45.00. Resistance is 47.40. After this reaction I expect to see the Q’s trade near 50 or higher later this year.

TLT - June Bonds: I think that this market is headed for 107-16. TLT will follow the trend in the bonds and will probably drop to 85.00.

June 10 Year Notes: The notes are headed for 104-20.

Euro-US Dollar: An extended decline is underway. Initial downside target is 133.50 but I think that the market will eventually drop to 125 or lower. Meantime resistance is at 136.70.

Dollar-Yen: The yen is headed for 123.50. Support is at 118.40. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – July Crude: I think XLE will stall near 68 and OIH near175, both new bull market highs. I think the next significant move in both will be downward. USO should bounce off of resistance near 50.60 and then drop to 45 or lower. July crude has nearly completed a rally phase which will end at a lower top near 68.00.

GLD - June Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. June gold should hold resistance at 696 and then drop below 600.

SLV - July Silver: SLV has bounced off of resistance near 141 and is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Next upside target is 503 while support is at 456.

Crude Oil, OIH, and XLE

Here are monthly charts of West Texas crude oil, Oil Service Holdrs, and the S&P Energy Select Spiders. I last commented on crude oil here.

XLE and OIH have both rallied to new bull market highs, contrary to my original expectation. Crude oil, on the other hand is trading about $10 below its 2006 high. My own interpretation of this divergence is that both XLE and OIH are about to make important tops and drop substantially in sympathy with crude oil which should soon resume its bear market.

Note that XLE has rallied to the 3 5/8 multiple of its 2002 low at 19.38. Similary, OIH has rallied to the 4 1/8 multiple of its 2001 low at 41.81. Both these multiples are generally strong resistance levels. I note also that the 64.60 level in crude is the 6 5/8 multiple of the all time low made in 1986 at 9.75.

I believe that the next down swing in crude will carry it to the 4 5/8 multiple of the 9.75 low. OIH will move down to 110 or a bit lower (the 2 5/8 mutiple) while XLE should drop to 41, the 2 1/8 multiple.

Guesstimates on May23, 8:50 am ET

Spiders - June S&P Futures: I think that 153.20 in the Spiders is strong resistance and that the market will soon drop to 150.00. Resistance in the futures is at 1535 and I expect this market to drop to 1500 or so. After this upcoming reaction is complete the Spiders should rally into the 155-157 range.

QQQQ: I think this market will soon break to 45.00. Resistance is 47.40. After this reaction I expect to see the Q’s trade near 50 or higher later this year.

TLT - June Bonds: I think that this market is headed for 108-110. TLT will follow the trend in the bonds and will probably drop to 85.00.

June 10 Year Notes: The notes are headed for 106-20.

Euro-US Dollar: An extended decline is underway. Initial downside target is 133.50 but I think that the market will eventually drop to 125 or lower. Meantime resistance is at 136.70.

Dollar-Yen: The yen is headed for 123.50. Support is at 118.40. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – July Crude: I think XLE will stall near 68 and that OIH will reach 175, both new bull market highs. I think the next significant move in both will be downward. USO should bounce off of resistance near 50.60 and then drop to 45 or lower. July crude has nearly completed a rally phase which will probably carry it to a lower top near 68.00.

GLD - June Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. June gold should hold resistance at 696 and then drop below 600.

SLV - July Silver: SLV has bounced off of resistance near 141 and is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Next upside target is 495 while support is at 456.

Tale of the Tape

LEADERS:


GOOG: Support at 456. Next upside target is 495.

IBM: Will probably react to 103 and then rally to 115.

GS: Resistance is now at 233 and I am looking for a break to 216 or so. After that a move to 250.

CME: Should drop in line with the general market and reach support which now stands at 487. From there I expect to see a rally at least to 560.

MO: Support is at 68. Upside target is 75.


OF INTEREST:


BIDU: Support is at 118. Upside target is 150.

CSCO: Support is at 25. Next upside target is 33.

AAPL: Support is at103. Next upside target is 116.

MSFT: Support is at 26.50. Next upside target is 33.50.

ICE: I now think the trend is up and that ICE is headed for 175. Meantime support is at 125.

NYX: I still think NYX will drop below its recent low at 79.31, this time finding support around the 75 level. After that a rally to 115 will become likely.

NMX: Lower tops show increasing weakness. I think NMX is about to break to 107.

PFE: Support is 25. Upside target is 30.

AMGN: Downside target is 50.

SHLD: I think SHLD is about to drop below initial support at 175 but it should hold the 168 level . Upside target is now 215.

KFT: Support is at 30. Next upside target is 39.

AMZN: Amazon should stall temporarily at 67 and react down to 63 or so. After that look for a rally to 76.

EBAY: Support is at 31.50. Upside target is 37.

WMT: We have seen a third lower top in WMT so I think it is headed for 41. I am abandoning my 55 target.

US Dollar and US Assets

The first chart you see above this post appeared in Floyd Norris' column "Off the Charts" in the Saturday, May 19 edition of the New York Times. Norris observed that Americans are now purchasing foreign long term assets at a record rate. This remains true even if one adjusts the numbers you see above for the growth in US GDP since 1993, the last time a peak in purchases of foreign assets occurred.

What are we to make of this? I am relentlessly bullish on the prospects for US economic growth vis a vis the rest of the world over the next 5-20 years. Obviously my long term views are not currently shared by many of my countrymen. But I feel quite comfortable holding the minority view on this matter. I think the numbers you see above are telling us that we are seeing an extreme in pessimism about the US dollar and about US dollar denominated assesets in general.

The second chart you see above this post is a monthly chart of the US Dollar index. The last time we saw such levesl of pessimism about the prospects for dollar denominated assets was in the early 1990's. Then the dollar index was trading at levels similar to those we see today.

I conclude from this that dollar denominated assets will outperform foreign currency assets for the next 5 years at least. Sell your estate on the Riviera and buy in Palm Springs. Moreover, US stocks will be at the top of the world performance charts, adjusted for currency fluctuations, for the next 5-10 years.

Guesstimates on May 22, 8:50 am ET

Spiders - June S&P Futures: I think that 153.20 in the Spiders is strong resistance and that the market will soon drop to 150.00. Resistance in the futures is at 1535 and I expect this market to drop to 1500 or so. After this upcoming reaction is complete the Spiders should rally into the 155-157 range.

QQQQ: I think this market will soon break to 45.00. Resistance is 47.40. After this reaction I expect to see the Q’s trade near 50 or higher later this year.

TLT - June Bonds: I think that this market is headed for 108-110. TLT will follow the trend in the bonds and will probably drop to 85.80.

June 10 Year Notes: The notes are headed for 106-20.

Euro-US Dollar: An extended decline is underway. Initial downside target is 133.50 but I think that the market will eventually drop to 125 or lower. Meantime resistance is at 136.70.

Dollar-Yen: The yen is headed for 123.50. Support is at 118.40. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – July Crude: I think XLE will stall near 68 and that OIH will reach 175, both new bull market highs. I think the next significant move in both will be downward. USO should bounce off of resistance near 50.60 and then drop to 45 or lower. July crude has nearly completed a rally phase which will probably carry it to a lower top near 68.00.

GLD - June Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. June gold should hold resistance at 696 and then drop below 600.

SLV - July Silver: SLV has bounced off of resistance near 141 and is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Next upside target is 495 while support is at 456.

S&P's, Spiders, and QQQQ's

Here is an hourly chart of the June S&P futures. The Spiders chart looks the same after dividing prices by 10. I last commented on this market here.

I think the 1535 level will prove to be strong resistance in the futures and that the Spiders will encounter strong resistance at 153.20. I expect the subsequent reaction to be comparable to the reaction of late March which dropped the futured from 1451 to 1418 or 33 points. (3.30 points in the Spiders). So the downside target is 1500 in the June futures and 150 in the Spiders. After this break I think the market will rally to new bull market highs.

I should point out in passing that the Spiders made a very important top on September 1, 2000 at the 153.60 level which ended a big, 4 and 1/2 month rally. This was a close test of the bull market high of March 2000 at 155.75. As a rule a market becomes vulnerable to a substantial reaction once it approaches and old top of significance. The Spiders are near the September 2000 top right now but I think the reaction will be relatively mild. I am looking for a much bigger reaction once the Spiders get close to their 2000 top at 155.75.

The Q's have been noticable underperforming the Spiders for the past few weeks. This is another sign that a reaction in the general market is imminent. I expect the Q's to drop to 45.00 and then to rally to new bull market highs.

Guesstimates on May 21, 8:50 am ET

Spiders - June S&P Futures: Upside target for the Spiders remains 153.20. I think a three point break is imminent and will carry the market down to 150.00 before another rally to new highs can begins. The S&P’s target is still 1535 but I think a break from there to 1500 (or 1515 in the September contract) will be the next development.

QQQQ: The Q’s haven’t been able to rally as much as I expected and are underperforming the Spiders. I think this market will stall near 46.80 and then break to 45.00. I still think that we shall see the Q’s trade near 50 or higher later this year.

TLT - June Bonds: I think that this market is headed for 108-110. TLT will follow the trend in the bonds and will probably drop to 85.80. .

June 10 Year Notes: The notes are headed for 106-20.

Euro-US Dollar: An extended decline is underway. Initial downside target is 133.50 but I think that the market will eventually drop to 125 or lower. Meantime resistance is at 136.70.

Dollar-Yen: The yen is headed for 123.50. Support is at 118.40. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – July Crude: I think XLE will stall near 68 and that OIH will reach 175, both new bull market highs. I think the next significant move in both will be downward. USO should bounce off of resistance near 50.60 and then drop to 45 or lower. July crude is in a rally phase which will probably carry it to a lower top near 68.00.

GLD - June Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. June gold should hold resistance at 696 and then drop below 600.

SLV - July Silver: SLVis on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Next upside target is 506 while support is at 456.

Guesstimates on May 18, 8:50 am ET

Spiders - June S&P Futures: Support remains at 150.00 in the Spiders and 1502 in the S&P’s. I think that the Spiders are headed up to 153.20 and the S&Ps are headed up to 1535.

QQQQ: The Q’s should hold above support at 45.80 and head up to 48.10. I am looking for a move up to 50.00 or higher over the next few months.

TLT - June Bonds: A bond close above 112-08 would turn me bullish but failing that I will stick with my view that this market is headed for 108-16. TLT will follow the trend in the bonds.

June 10 Year Notes: The notes are headed for 106-20. Resistance in the notes is at 108-10 and a close above the 108-16 level would mean that the trend has turned upward.

Euro-US Dollar: An extended decline is underway. Initial downside target is 133.50 but I think that the market will eventually drop to 125 or lower. Meantime resistance is at 136.70.

Dollar-Yen: The yen is headed for 123.50. Support is at 118.40. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – July Crude: Both XLE and OIH have hit their targets at 65 and 165 respectively. I think the next significant move in both will be downward. USO is headed for 45. July crude is in a rally phase which will probably carry it to a lower top near 68.00.

GLD - June Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. June gold should hold resistance at 696 and then drop below 600.

SLV - July Silver: SLV has bounced off of resistance near 141 and is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Next upside target is 495 while support is at 456.

Guesstimates on May 17, 8:50 am ET

Spiders - June S&P Futures: Support today is again at 150.00 in the Spiders and 1502 in the S&P’s. I think that the Spiders are headed up to 153.20 and the S&Ps are headed up to 1535.

QQQQ: The Q’s should hold above support at 45.80 and head up to 48.10. I am looking for a move up to 50.00 or higher over the next few months.

TLT - June Bonds: A bond close above 112-08 would turn me bullish but failing that I will stick with my view that this market is headed for 108-16. TLT will follow the trend in the bonds.

June 10 Year Notes: The notes are headed for 106-20. Resistance in the notes is at 108-10 and a close above the 108-16 level would mean that the trend has turned upward.

Euro-US Dollar: An extended decline is underway. Initial downside target is 133.50 but I think that the market will eventually drop to 125 or lower. Meantime resistance is at 136.70.

Dollar-Yen: The yen is headed for 123.50. Support is at 118.40. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – June Crude: Both XLE and OIH have hit or closely approached their targets at 65 and 165 respectively. I think the next significant move in both will be downward. USO is headed for 45. June crude is headed for support at 56.50.

GLD - June Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. June gold should hold resistance at 696 and then drop below 600.

SLV - July Silver: SLV has bounced off of resistance near 141 and is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Next upside target is 495 while support is at 456.

How Much Farther?

During the past few days I have been trying to evaluate the stock market's upside potential from current levels. In my 2007 stock market forecast I estimated a top for May 17 using George Lindsay's theory of basic advances and declines. Over the past months I have used this projection as a guide for interpreting two current examples of Lindsay's famous Three Peaks and a Domed house pattern.

While I love to predict the future my only real committment as a speculator is to stayed glued to the trend as evidenced by the market's pattern of higher lows and highs or lower lows and highs. I never trade my forecast per se unless it is consistent with what I see as the developing trend.

To get a handle on the market's trend and the trend's likely points of reversal I use a few simple statistical devices. I have commented on two of these recently.

The first chart above this post shows the daily count of the number of issues traded on the New York Stock Exchange which advance in price. The blue line is the 20 day moving average of this number. In a recent post I explained that in a bull market tops are most likely to occur during a time span beginning 2 months after the moving average peak and ending 4 months after the peak. In the current situation this method calls for a top for the current upswing sometime between June 16 and August 16.

In a separate post I noted the lengths of previous upswings in the bull market which started from the 2002 lows. Using the Spiders as an index I projected a top for the current upswing at 156.70 (vs. the current level of 151.00).

Along the same lines I should also add that these bull market upswings lasted anywhere from 4 to 8 months. So the top for the upswing which began on March 14, 2007 should be expected in the July 14 to November 14 time frame.

For these reasons I no longer believe that the May 17 date first mentioned in my 2007 stock market forecast will be a significant market top.

An expectation more in line with the statistical consideration just discussed would be for a July top. There is even a 1 in 3 chance that the market will be stronger than even I expect and continue its advance to late October or early November.

The second chart above this post shows a slightly revised version of the basic advances and declines in the Dow. The two alternatives for a top date are July 13 and October 30.

In the third and fourth charts above this post you see my current interpretations of two separate domed house portions of two distinct Three Peaks and a Domed House formation.

The third chart shows the long term formation. Note that I have renumbered the recent action so that the March low is point 20, the end of the five reversals part of the domed house, instead of point 22, a low within the top of the entire formation. I have also pushed the projected top, point 23, to July 13.

The fourth chart shows a minor version of the three peaks and domed house. Note that the rally from point 10, the March low, has been fast and furious so far. In particular, there has been no sign yet of the 5 reversals part of the formation which normally preceeds point 23. For this reason I feel quite comfortable pushing point 23 for this formation to July 13 as well.

Guesstimates on May 16, 8:50 am ET

Spiders - June S&P Futures: Support today is again at 150.00 in the Spiders and 1502 in the S&P’s. I think that the Spiders are headed up to 153.20 and the S&Ps are headed up to 1535.

QQQQ: The Q’s should hold above support at 45.80 and head up to 48.10. I am looking for a move up to 50.00 or higher over the next few months.

TLT - June Bonds: A bond close above 112-08 would turn me bullish but failing that I will stick with my view that this market is headed for 108-16. TLT will follow the trend in the bonds.
June 10 Year Notes: Resistance in the notes is at 108-10 and a close above the 108-16 level would mean that the trend has turned upward.

Euro-US Dollar: An extended decline is underway. Initial downside target is 133.50 but I think that the market will eventually drop to 125 or lower. Meantime resistance is at 136.70.

Dollar-Yen: The yen is headed for 123.50. Support is at 118.40. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – June Crude: Both XLE and OIH have hit or closely approached their targets at 65 and 165 respectively. I think the next significant move in both will be downward. USO is headed for 45. June crude is headed for support at 56.50.

GLD - June Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. June gold should hold resistance at 696 and then drop below 600.

SLV - July Silver: SLV has bounced off of resistance near 141 and is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Next upside target is 495 while support is at 456.

Tale of the Tape

LEADERS:


GOOG: Support at 456. Next upside target is 495.

IBM: Upside target is 110.

GS: Support at 198. Upside target is 235.

CME: Now headed up to 630. Support is at 516.

MO: Support is at 66. Upside target is 75.


OF INTEREST:


BIDU: Support is at 115. Upside target is 150.

CSCO: Support is at 25. Next upside target is 33.

AAPL: Support is at 92. Next upside target is 116.

MSFT: Support is at 26.50. Next upside target is 33.50.

ICE: I now think the trend is up and that ICE is headed for 175. Meantime support is at 125.

NYX: Headed down to 77 then up to 115.

NMX: Headed down to 115.

PFE: Support is 25. Upside target is 30.

AMGN: Downside target is 50.

SHLD: Support is at 175. Upside target is 210.

KFT: Support is at 30. Next upside target is 39.

AMZN: Support is at 56. Upside target is 67.

EBAY: Support is at 30. Upside target is 40.

WMT: Support is at 45. Upside target is 55.

Guesstimates on May 15, 9:10 am ET

Spiders - June S&P Futures: It looks like the reaction ended late Thursday and stopped shy of my targets of 149.00 in the Spiders and 1494 in the S&P’s. Support today is at 150.00 in the Spiders and 1502 in the S&P’s. I now that the Spiders are headed up to 153.20 and the S&Ps are headed up to 1535.

QQQQ: The Q’s held above support at 45.80 and are now headed up to 48.10. I am looking for a move up to 50.00 or higher over the next few months.

TLT - June Bonds: A bond close above 112-08 would turn me bullish but failing that I will stick with my view that this market is headed for 108-16. TLT will follow the trend in the bonds.

June 10 Year Notes: Resistance in the notes is at 108-10 and a close above the 108-16 level would mean that the trend has turned upward.

Euro-US Dollar: An extended decline is underway. Initial downside target is 133.50 but I think that the market will eventually drop to 125 or lower. Meantime resistance is at 135.80.

Dollar-Yen: The yen is headed for 123.50. Support is at 118.40. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – June Crude: Both XLE and OIH have hit or closely approached their targets at 65 and 165 respectively. I think the next significant move in both will be downward. USO is headed for 45. June crude is headed for support at 56.50.

GLD - June Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. June gold should hold resistance at 696 and then drop below 600.

SLV - July Silver: SLV has bounced off of resistance near 141 and is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Next upside target is 495 while support is at 456.

Guesstimate on May 14, 8:50 am ET

Spiders - June S&P Futures: It now looks like the reaction ended late Thursday and stopped shy of my targets of 149.00 in the Spiders and 1494 in the S&P’s. I now think that the Spiders are headed up to 153.20 and the S&Ps are headed up to 1535.

QQQQ: The Q’s held above support at 45.80 and are now headed up to 48.10. I am looking for a move up to 50.00 or higher over the next few months.

TLT - June Bonds: A bond close above 112-08 would turn me bullish but failing that I will stick with my view that this market is headed for 108-16. TLT will follow the trend in the bonds.

June 10 Year Notes: Resistance in the notes is at 108-10 and a close above the 108-16 level would mean that the trend has turned upward.

Euro-US Dollar: An extended decline is underway. Initial downside target is 133.50 but I think that the market will eventually drop to 125 or lower. Meantime resistance is at 135.80.

Dollar-Yen: The yen is headed for 123.50. Support is at 118.40. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – June Crude: Both XLE and OIH have hit or closely approached their targets at 65 and 165 respectively. I think the next significant move in both will be downward. USO is headed for 45. June crude is headed for support at 56.50.

GLD - June Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. June gold should hold resistance at 696 and then drop below 600.

SLV - July Silver: SLV has bounced off of resistance near 141 and is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Next upside target is 495 while support is at 456.

Guesstimate on May 11, 8:50 am ET

Spiders - June S&P Futures: The Spiders are on their way to support near 149.00 and the futures should drop to support near 1494. From those levels I expect the market to start a rally which will carry the futures to 1538 and the Spiders to 153.30.

QQQQ: Next upside target in the Q’s is at 47.30 while support stands at 45.80. I am looking for a move up to 50.00 or higher over the next few months.

TLT - June Bonds: A bond close above 112-08 would turn me bullish but failing that I will stick with my view that this market is headed for 108-16. TLT will follow the trend in the bonds.

June 10 Year Notes: Resistance in the notes is at 108-10 and a close above the 108-16 level would mean that the trend has turned upward.

Euro-US Dollar: The Euro is making a top at the same level as the December ’04 high of 136.66. Yesterday’s break below 135.00 is good evidence that an extended decline is underway. Initial downside target is 133.50 but I think that the market will eventually drop to 125 or lower.

Dollar-Yen: The yen is headed for 123.50. Support is at 118.40. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – June Crude: Both XLE and OIH have hit or closely approached their targets at 65 and 165 respectively. I think the next significant move in both will be downward. USO is headed for 45. June crude is headed for support at 56.50.

GLD - June Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. June gold should hold resistance at 696 and then drop below 600.

SLV - July Silver: SLV has bounced off of resistance near 141 and is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Next upside target is 495 while I am lowering my support estimate to 456 from 465.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the June S&P future and the Spiders. My data feed for the Q's is broken at the moment so I can't show you a chart for that market. I last commented on these markets here.

I think the S&P's will find support near 1493 and the Spiders near 149.00. From those levels I expect the market to rally to a new bull market high. Upside target for the S&P's is 1536 and for the Spiders is 153.30.

The Q's should hold support near 45.90 and then rally to 47.50.

Guesstimates on May 10, 8:50 am ET

Spiders - June S&P Futures: The Spiders are on their way to support near 149.00 and the futures should drop to support near 1494. From those levels I expect the market to start a rally which will carry the futures to 1538 and the Spiders to 153.30.

QQQQ: Next upside target in the Q’s is at 47.30 while support stands at 45.80. I am looking for a move up to 50.00 or higher over the next few months.

TLT - June Bonds: A bond close above 112-08 would turn me bullish but failing that I will stick with my view that this market is headed for 108-16. TLT will follow the trend in the bonds.

June 10 Year Notes: Resistance in the notes is at 108-10 and a close above the 108-16 level would mean that the trend has turned upward.

Euro-US Dollar: The Euro is making a top at the same level as the December ’04 high of 136.66. I still think that the market will drop below the 130 level before it hits 137.50.

Dollar-Yen: The yen is headed for 123.50. Support is at 118.40. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – June Crude: Both XLE and OIH have hit or closely approached their targets at 65 and 165 respectively. I think the next significant move in both will be downward. USO is headed for 45. June crude is headed for support at 56.50.

GLD - June Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. June gold should hold resistance at 696 and then drop below 600.

SLV - July Silver: SLV has bounced off of resistance near 141 and is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Next upside target is 495 while support is at 465.

Guesstimates on May 9, 8:50 am ET

Spiders - June S&P Futures: The Spiders are on their way to support near 149.00 and the futures should drop to support near 1494. From those levels I expect the market to start a rally which will carry the futures to 1538 and the Spiders to 153.30.

QQQQ: Next upside target in the Q’s is at 47.30 while support stands at 45.80. I am looking for a move up to 50.00 or higher over the next few months.

TLT - June Bonds: A bond close above 112-08 would turn me bullish but failing that I will stick with my view that this market is headed for 108-16. TLT will follow the trend in the bonds.

June 10 Year Notes: Resistance in the notes is at 108-10 and a close above the 108-16 level would mean that the trend has turned upward.

Euro-US Dollar: The Euro is making a top at the same level as the December ’04 high of 136.66. I still think that the market will drop below the 130 level before it hits 137.50.

Dollar-Yen: The yen is headed for 123.50. Support is at 118.40. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – June Crude: Both XLE and OIH have hit or closely approached their targets at 65 and 165 respectively. I think the next significant move in both will be downward. USO is headed for 45. June crude is headed for support at 56.50.

GLD - June Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. June gold should hold resistance at 696 and then drop below 600.

SLV - July Silver: SLV has bounced off of resistance near 141 and is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Next upside target is 495 while support is at 465.

Tale of the Tape

LEADERS:


GOOG: Support at 465. Next upside target is 495.

IBM: Next upside target is 110.

GS: Support at 198. Next upside target is 235.

CME: Headed down to 495 then up to 630.

MO: Support is at 66. Upside target is 75.


OF INTEREST:


BIDU: Support is at 115. Upside target is 150.

CSCO: Support is at 25. Next upside target is 33.

AAPL: Support is at 92. Next upside target is 108.

MSFT: Support is at 26.50. Next upside target is 33.50.

ICE: Headed down to 116 then up to 150.

NYX: Headed down to 77 then up to 115.

NMX: Headed down to 115.

PFE: Support is 25. Upside target is 30.

AMGN: Resistance is 65. Downside target is 50.

SHLD: Support is at 175. Upside target is 210.

KFT: Support is at 30. Next upside target is 39.

AMZN: Support is at 56. Upside target is 67.

EBAY: Support is at 30. Upside target is 40.

WMT: Support is at 45. Upside target is 55.

Guesstimates on May 8, 8:50 am ET

Spiders - June S&P Futures: The Spiders are on their way to support near 149.00 and the futures should drop to support near 1494. From those levels I expect the market to start a rally which will carry the futures to 1538 and the Spiders to 153.30.

QQQQ: Next upside target in the Q’s is at 47.30 while support stands at 45.80. I am looking for a move up to 50.00 or higher over the next few months.

TLT - June Bonds: The bonds have moved decisively above resistance at 111-20. A strong close today if accompanied by a strong close in the 10 year notes will turn me bullish on these markets. TLT will follow the trend in the bonds.

June 10 Year Notes: Resistance in the notes is at 108-10 and a close above the 108-16 level today will mean that the trend has turned upward.

Euro-US Dollar: The Euro is making a top at the same level as the December ’04 high of 136.66. I still think that the market will drop below the 130 level before it hits 137.50.

Dollar-Yen: The yen is headed for 123.50. Support is at 118.40. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – June Crude: Both XLE and OIH have hit or closely approached their targets at 65 and 165 respectively. I think the next significant move in both will be downward. USO is headed for 45. June crude is headed for support at 56.50.

GLD - June Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. June gold should hold resistance at 696 and then drop below 600.

SLV - July Silver: SLV has bounced off of resistance near 141 and is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Next upside target is 495 while support is at 465.

No Punch at This Party

The bull market which began in October 2002 from the 7200 level in the Dow and the 768 level in the S&P is now well into its fifth year. The Dow has already moved well above its 2000 bull market peak of 11750 while the S&P cash index is getting close to its previous bull market high of 1553. Despite this I think that investors are not having much fun at this bull market party. (My last comment on the state of market sentiment can be found here. )

The most remarkable statistic I have seen lately can be found in the chart above (courtesy of DecisionPoint.com). It depicts the weekly sentiment numbers of the poll conducted by the Association of Individual Investors. The weekly bullish percentages are the green vertical bars, the bearish percentages are the red vertical bars, and the ratio of these two are the purple bars at the bottom of the chart.

Last week's bearish percentage was the highest it has been in almost a year despite the fact that the averages were all at new bull market highs at the time the poll was taken. It seems that individual investors were so traumatized by the 2 week drop in late February-early March of 2007 that they are now determined to pick the top of this rally and thereby avoid the pain of the next reaction. An even more plausible interpretation is that many investors thought the late February drop was the start of a bear market and therefore abandoned their investment positions. Now they are hoping for a reaction to so that they may repurchase the longs they sold two months ago. In either case I think that this sort of bearish sentiment seen at new rally highs means that the top is not yet in sight.

The same message comes through in three recent items in the New York Times. I have always done well by fading the Times and for this reason it is my single most reliable contrary opinion tool. Previous examples of this can be found here, here, and here. (All my contrary opinion posts can be found here.)

This past Saturday the Times again editorialized, this time on the economy instead of the stock market. The Times said: " If this strain on family finances ends up curbing consumer spending, the economy at large will be in danger of recession. [.....] When the next downturn hits in force, it will become painfully clear that American workers have not shared in the benefits of Bush-era econopmic growth..." The New York Times has been anticipating an imminent recession for the past three years. One of these years they will be right.

The next two items are the last two "Off The Charts" columns by Floyd Norris which appear each Saturday in the Times business section. Now I happen to like Norris's work and he often has interesting things to say. In fact he even "called" the bottom of the bear market in a July 2002 column. Nonetheless, Norris is like every other jounalist in the sense that he does well by telling people what they want to hear.

His April 28 column was entitled " The Dow May Be at Its High, but Its Performance Is Still Lacking". He points out in this column that the majority of Dow stocks are still below their year 2000 peaks even while the average is above its corresponding top.

His May 5 column was entitled "A Comeback for the S&P (If the Yardstick is Dollars)". Here he observes that the S&P in dollar terms has recovered most of its 2000-2002 bear market but in terms of various foreign currencies or in terms of oil there has been little or no recovery.

Both these columns give investors reason to doubt the bullish significance of the recent new highs in the averages. Norris asks his readers in effect : " Who are you going to believe, me or your own lyin' eyes ??". This attitude I also take as evidence that no significant top in the averages is likely anytime soon.

Guesstimates on May 7, 8:50 am ET

Spiders - June S&P Futures: I think that the futures will react 20-25 points and the Spiders 2 to 2 ½ points from here before resuming the bull move to new highs. Resistance in the Spiders is at151.20 and resistance in the futures is at 1517.

QQQQ: Next upside target in the Q’s is at 47.30 while support stands at 45.80. I am looking for a move up to 50.00 or higher over the next few months.

TLT - June Bonds: I now think TLT will drop to 85 before resuming its bull market. Resistance above the market in the bonds is at 111-20 and the next downward swing should carry the market to 108-12.

June 10 Year Notes: Resistance in the notes is at 108-10. The market is headed for the 105-16 level.

Euro-US Dollar: The Euro is making a top at the same level as the December ’04 high of 136.66. I still think that the market will drop below the 130 level before it hits 137.50.

Dollar-Yen: The yen is headed for 123.50. Support is at 118.00. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – June Crude: Both XLE and OIH have hit or closely approached their targets at 65 and 165 respectively. I think the next significant move in both will be downward. USO is headed for 45. June crude is headed for support at 56.50.

GLD - June Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. June gold should hold resistance at 696 and then drop below 600.

SLV - July Silver: SLV has bounced off of resistance near 141 and is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Next upside target is 495 while support is at 465.

Guesstimates on May 4, 8:50 am ET

Spiders - June S&P Futures: The Spiders should reach their 151.20 near term target today since the futures have already hit 1517 in early morning trading. Support in the Spiders is at 149.00 and in the S&P’s support stands at 1495. Next upside targets are 152.60 and 1532 respectively.

QQQQ: Next upside target in the Q’s is at 47.30 while support stands at 46.50. I am looking for a move up to 50.00 or higher over the next few months.

TLT - June Bonds: I now think TLT will drop to 85 before resuming its bull market. Resistance above the market in the bonds is at 111-20 and the next downward swing should carry the market to 108-12.

June 10 Year Notes: Resistance in the notes is at 108-10. The market is headed for the 105-16 level.

Euro-US Dollar: The Euro is making a top at the same level as the December ’04 high of 136.66. I still think that the market will drop below the 130 level before it hits 137.50.

Dollar-Yen: The yen is headed for 123.50. Support is at 118.00. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – June Crude: I am expecting a top in XLE near 65 and in OIH near 165. USO is headed for 45. June crude has resistance at 66.80 and a move from there to 60.00 and lower is underway.

GLD - June Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. June gold has bounced off of resistance at 696 and is now headed below 600.

SLV - July Silver: SLV has bounced off of resistance near 141 and is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Next upside target is 495 while support is at 465.

S&P Bull Market Boxes

Here is a weekly chart of the cash S&P 500 index. I last commented on this chart here.

As you know I think that the bull market which began from the October 2002 low at 768 has been controlled by boxes which are about 185 S&P points high. I have drawn these on the chart above. The February-March 2007 reaction was the first of the bull market which did not either start or end on the divisions of the boxes you see above. I think this is a warning that these boxes which have functioned so well for 4 years are loosing their predictive power.

I want to point out that the February-March reaction started near the 3/4 division point of a box and ended near the 1/4 division point of the same box. I am guessing that the market now will start respecting the 3/4 and 1/4 division points of these boxes instead of the 1/2 division point and the box boundary itself. If so the next upside target is about 1560 which is the 1/4 division point of the next higher box.

Guesstimates on may 3, 8:50 am ET

Spiders - June S&P Futures: Support in the Spiders is at 148.50 and in the S&P’s is at 1492. Next upside targets are151.20 in the Spiders and 1517 in the S&P’s.

QQQQ: Next upside target in the Q’s is at 47.30 while support stands at 45.90. I am looking for a move up to 50.00 or higher over the next few months.

TLT - June Bonds: I now think TLT will drop to 85 before resuming its bull market. Resistance above the market in the bonds is at 111-20 and the next downward swing should carry the market to 108-12.

June 10 Year Notes: Resistance in the notes is at 108-10. The market is headed for the 105-16 level.

Euro-US Dollar: The Euro is making a top at the same level as the December ’04 high of 136.66. I still think that the market will drop below the 130 level before it hits 137.50.

Dollar-Yen: The yen is headed for 123.50. Support is at 118.00. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – June Crude: I am expecting a top in XLE near 65 and in OIH near 165. USO is headed for 45. June crude has resistance at 66.80 and a move from there to 60.00 and lower is underway.

GLD - June Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. June gold has bounced off of resistance at 696 and is now headed below 600.

SLV - July Silver: SLV has bounced off of resistance near 141 and is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Next upside target is 495 while support is at 465.

Guesstimates on May2, 9:00 am ET

Spiders - June S&P Futures: Support in the Spiders is at 147.50 and in the S&P’s is at 1487. Next upside targets are151.20 in the Spiders and 1517 in the S&P’s.

QQQQ: Resistance in the Q’s is at 46.70 while support stands at 45.90. I am looking for a move up to 50.00 or higher over the next few months.

TLT - June Bonds: I now think TLT will drop to 85 before resuming its bull market. Resistance above the market in the bonds is at 111-20 and the next downward swing should carry the market to 108-12.

June 10 Year Notes: Resistance in the notes is at 108-10. The market is headed for the 105-16 level.

Euro-US Dollar: The Euro is making a top at the same level as the December ’04 high of 136.66. I still think that the market will drop below the 130 level before it hits 137.50.

Dollar-Yen: The yen is headed for 123.50. Support is at 118.00. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – June Crude: I am expecting a top in XLE near 65 and in OIH near 165. USO is headed for 45. June crude has resistance at 66.80 and a move from there to 60.00 and lower should develop soon.

GLD - June Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. June gold has bounced off of resistance at 696 and is now headed below 600.

SLV - July Silver: SLV has bounced off of resistance near 141 and is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Next upside target is 495 while support is at 465.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the June S&P futures, the Spiders, and the QQQQ's.

All three markets went below the support I cited in this morning's guesstimate. Nonetheless, I think the reaction is over and that the S&P's are headed for 1517, the Spiders for 151.20, and the Q's for 47.30.

If I am wrong and this reaction has further to go then I would expect the S&P's to drop to 1474, the Spiders to 146.80 and the Q's to 45.40 before the move to the next upside target begins.

Guesstimates on May 1, 8:50 am ET

Spiders - June S&P Futures: Support in the Spiders is at 148.20 and in the S&P’s is at 1490. Next upside targets are151.00 in the Spiders and 1517 in the S&P’s.

QQQQ: Resistance in the Q’s is at 46.70 while support stands at 45.90. I am looking for a move up to 50.00 or higher over the next few months.

TLT - June Bonds: I now think TLT will drop to 85 before resuming its bull market. Resistance above the market in the bonds is at 111-20 and the next downward swing should carry the market to 108-12.

June 10 Year Notes: Resistance in the notes is at 108-10. The market is headed for the 105-16 level.

Euro-US Dollar: The Euro is making a top at the same level as the December ’04 high of 136.66. I still think that the market will drop below the 130 level before it hits 137.50.

Dollar-Yen: The yen is headed for 123.50. Support is at 118.00. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – June Crude: I am expecting a top in XLE near 65 and in OIH near 165. USO is headed for 45. June crude has resistance at 66.80 and a move from there to 60.00 and lower should develop soon.

GLD - June Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. June gold has bounced off of resistance at 696 and is now headed below 600.

SLV - July Silver: SLV has bounced off of resistance near 141 and is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Next upside target is 495 while support is at 465.