Spiders - September S&P Futures: The S&P’s have dropped back to the the low of the trading range which is 1432.25. I think they will go a little lower to 1425 and then rally back to the top of the range near 1500.
QQQQ: Support is at 46.90. Upside target later this year is 53.00.
TLT - September Bonds: I think an extended drop all the way down to 103 has started. The 109-28 level is resistance. TLT shows strong resistance near 87.50 and should soon begin a drop to 80-81.
September 10 Year Notes: The notes have strong resistance at 107-24 and have begun a drop to 102 or so.
Euro-US Dollar: Resistance today is again at 138.50. Strength above there will make the next upside target 141.00.
Dollar-Yen: The 117.50 to 119.00 is strong support in the yen and I think a low will form there and be followed by a move to 130.
XLE - OIH - USO – September Crude: It looks like crude oil has started a big move downward. The 66.00 level is the initial target but I think that the market will drop below 50.00 over the next 12 months. Both XLE and OIH are headed much lower. The 57.80 level looks like the ceiling for USO.
GLD - December Gold: I will stick with my 705 upside target for the futures unless gold shows weakness below the 660 level. In any case the next 100 dollar move should be down. I think GLD will drop below 60 on its way to much lower levels. Resistance in GLD is 68.50.
SLV - September Silver: Weakness below 1250 in the futures will convince me that an extended drop has started. Meantime I shall stick with my1370 upside target. SLV should bounce off of resistance near 133 and then drop below 120.
Google: I think the market will hold support near 497. Next upside target is 580-85. Google will trade above the 600 level later this year.
10 comments:
Well ... pretty grim out there. I don't know if this means anything, but the SP100 is still above it's Aug 6th low of 665.49. Plus the Russell2000 is well above it's low too.
Bulls would be better off with at least nominal new lows and therefore non-confirmations. No new lows would mean to me candy-a** near term rallies follwed by more declines.
grim or not grim... it is time to be a contrarian. This market is a screaming buy
Carl,
What level would the ES have to reach for you to conclude we're not going to 1425?
Matt
Well Matt I think the ES should not violate 1475 otherwise another downleg to 1425.
Has anyone considered that this might just be a pull-back in an otherwise healthy bull market? This sub-prime crap stuff is nothing new, anyone alive wld hv heard about it a year ago. The party is over for the banks and financila institutions. They shd have NEVER underwrote any of these loans, or at least not traded it like it was prime paper! The rating agencies have failed again! Capitalism produces too many idiots with money.
100 years plus of history of market clearly demonstrates triumph of optimism over pessimism. In few months time all this Armageddon talk will be just a blip. Perma bears are fools and idiots who do not understand markets and the markets statistical tendencies or want to ignore it to create a cult. Fools and idiots seldom make money in the market.
Current market is ideal for day traders and nimble swing traders. Alternatively one can use such period for R&D. The best thing to do during such time is to take a vacation, sit in cash and enjoy the fun and games from the sidelines. Timing your vacation during market corrections is always a good strategy. But honestly today is a good day to be a contrarian, have the guts and put some money to work.. I do not think that you will regret this in a months time.
PMK
Carl I can't beleive how many comments you had yesterday and today. Alot of your detractors musta have gotten burned listing to you yesterday without stopping to think.
One of the things that makes Carl unique is that he is happy to admit he is wrong and change his mind. He might not do it 3 minutes after the market violates his target, but he will change his mind later and explain why, without trying to explain why his first prediction went wrong. He has pointed out that he uses a much shorter timeframe in his own trading, so its up to all of us to find our own way to trade Carl's forecasts, if we want to trade them at all.
If we hadn't had another fund blow up yesterday, Im sure that 1475 would have in fact been the low. But it happened and so today Carl changed his prediction to take that development into account. I wouldn't be surprised to see the market fall to the 1425 level near the close, and then next week have it rally into options expiration and screw over all the put buyers yet again. But we shall see.
Dollar/Yen 130? Google over 600?
I want some of what you're smoking. It has to be illegal.
Gotta account for the macro economics in your forecasts and views, and you're not. Clearly not.
Point 1: The US Housing market is a WRECK. It is nowhere near the bottom; these cycles tend to be ten years in duration (five up, five down) and we're a year and change into the "down". We will not bottom in housing until 2009 if we're lucky. Valuations WILL come back into historical norms .vs. income; right now they're 2x historical norms. We might stop at the upper end of the range (a 30% decline in house prices from the peak in '05) but more likely is a 50% retracement, with some bubble areas getting hit even harder than that. This, by the way, is (through direct and indirect effects) 20% of the economy.
Point 2: The consumer took advantage of this explosion in home prices to cash out the money and spend it. Now they have debt instead and are underwater. Even if they don't default en-masse (which is possible) the ability to add 5% a year to your income via MEWs is closed off. This became rabidly apparently during 1Q Earnings in the form of huge revolving credit increases (which looks good - more income for those banks, right?) but it is actually VERY BAD because debt service can't be spent on more consumption. So we get a DOUBLE contraction of consumer spending.
I am expecting negative GDP growth by 4Q and a declared recession just in time to call it "Grinchmas."
And by the way, historically speaking, equities lose 35% of their value - on average - during a recession.
Technically we have "sideways" signals right now. We could rally back to 1522 on the S&P without violating this thesis.
We have to break the long-term trendlines (from the 2003 lows) to make a call for a formal "bear market." I believe we will do exactly that, and am watching this very closely. We can within a hair of validation of a primary trend change on the Nasdaq Composite/NDX last week and will likely take another shot at it this week or next.
The credit markets always lead equities guys. Always. And the credit markets are telling you, right here and now, that all is not well.
Ignore that at your peril; if you're risk-averse there is nothing wrong with hiding in cash.
BTW you also have an interesting divergence in your view on bonds .vs. stocks. A drop in bond prices means an increase in real interest rates, perhaps a precipitous one. That isn't good for equities either!
a coment to the veteran investors out there. personally I don't have
much experience compared to I'm sure what is out there and writing some of the posts I'm reading. Do
spend a little time chatting with my brother in law who is a market
veteran and money manager with cfa,etc. my thoughts are its a little crazy out there, but this at the same time can provide some
unique opportunities that normally
wouldn't be out there, so take a few deep breaths(which i'm doing)
and be patient. It may get worse,
but I don't see a 1987 or '29 scenario- too much going on globally. So keep an eye out there
for the fire sales and drastic
sell offs like tma the other day.
I don't think you have to be a genius to find some good opportunities in the mkt. Take the
experts 'news'and opinions with a
grain of salt and a nice glass of
merlot or whatever suits, I think
Mr. Futia has a good of chance of
calling this mkt from his technical
perspective- I continue to pick my
points carefully and am going to take my gains on the up days till
we get through this turmoil and
the mortgage/subprime./credit crunch mess is a lot clearer in the
market. Personally, I think this is an exciting time to be in the mkt and if it is giving you fits take a break on the sidelines and
get back in next quarter.
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