S&P

The hourly chart above shows that the September S&P futures have again dropped to the bottom of the current box. I think this is strong support and that the market will head up from here. The 1268 level, the top of the current box, is the next target.

Guesstimates on August 16, 8:50 am ET

S&P: The 1227 level is support and the next step up will carry the market to 1268.

Bonds: I am expecting a two box rally from the 113-24 low which makes 116-16 the upside target for the next couple of days.

10 Year Notes: I am expecting a two box rally from the 109-27 low which makes the upside target 111-20.

Eurocurrency: Broke support at 123.60 but will hold support at 122.70. The next step up will carry to 125.60.

September Crude: I think the market will hold Friday's high at 67.10 and head down to 64.40.

Gold: Support is at 444 and the next step up will carry to 463.

Google: 280 is support; the next move up will reach 343.

Are Americans "Sour" About Everything?

Kevin Hassett thinks so! Take a look at his latest column on Bloomberg.

This is a commentator who sees what I see. Public sentiment is still depressed and this is NOT what one will see when the bull market top occurs. Stocks are headed up big from here.

Borrowing Baidu.com

In order to sell a company's stock short you must first find someone to loan you its shares. Borrowing shares like this costs money. Here is an article about the market for borrowed shares of Baidu.com. (Hat tip: Trader Mike)

Evidently, borrowing shares to short BIDU is very difficult and expensive. This tells me that there is a large contingent of traders who think shorting BIDU here is a sure road to riches. I am naturally suspicious of such widely held bearish views. I am sticking with my forcast that BIDU will hit 270 over the next 6-9 months.

Guesstimates on August 15, 9:00 am ET

S&P: The 1227 level is support and the next step up will carry the market to 1268.

Bonds: I am expecting a two box rally from the 113-24 low which makes 116-16 the upside targetfor the next couple of days.

10 Year Notes: I am expecting a two box rally from the 109-27 low which makes the upside target 111-20.

Eurocurrency: Support is 123.60 and the next step up will carry to 125.60.

September Crude: I think the market will hold Friday's high at 67.10 and head down to 64.40.

Gold: Support is at 444 and the next step up will carry to 463.

Google: 280 is support; the next move up will reach 343.

Bonds and Notes

Above this post you will see hourly charts of the September T-bond and 10 year notes futures updated through Friday's pit close. Both markets have rallied more than a full box from the lows made last Tuesday.

I think this is telling us that both markets have started the big upswing that I have been expecting these past three weeks. I am predicting that the bonds will move into the 121-123 range and the notes to 116. The drop from the early June high took 9 weeks so I think the coming upswing will last at least that long.

There are as yet no convincing price boxes for the new uptrend and in such circumstances I continue to use the existing boxes you see on the charts. I think the bonds will rally to 116-16 or so in the next couple of days and then drop enough to define a new price box. The notes will probably move to 111-16 to 111-20 before reacting.

Eurocurrency Boxes

In this morning's guesstimate I said that the September eurocurrency was on its way to the top of its box at 125.60.

Meantime, the trade number has come out and killed the market. Still, this is only a reaction in an uptrend that is still not complete. I expect support to come in at the bottom of the box at 123.70. If that level fails then the worst we should see is 122.80 or so.

Too Bullish?

I keep hearing that there is too much bullish sentiment around about the stock market and that this means that a subtantial drop lies dead ahead. Let me explain why I think this is nonsense.

Here is a chart of what I call the "Rydex Ratio". It comes courtesy of Decisionpoint.com. (You have to be a subscriber to access this data, but I think the $20 monthly subscription fee is well worth it!)

This number is the ratio of money flows into Rydex bull funds to money flows into both Rydex bear funds and Rydex bull funds. Note that the scale on the chart is reversed. Low values indicate bullish public sentiment but show high up on the chart while high values indicate bearish sentiment but show at low levels on the chart.

The important thing to me is that this number measures what amateur speculators are acutally doing in the stock market as opposed to what they or their advisors are saying. Talk is cheap and actions speak much louder than words!

You can see that during the rally from the April lows this ratio showed gradually increasing bullish sentiment but it never got near the level associated with the March 2005 top or the March 2004 top in the S&P 500. Moroever, during the past two months the ratio has shown increasing bearish public sentiment as the S&P has steadily but slowly crept higher.

I think that before the S&P 500 can drop even as much as 5% this ratio will first have to move down below 0.70 (i.e. the line on the chart will have to move upward!).

The Rydex ratio reinforces my conviction that there is too much bearish sentiment out there to allow a stock market top of any importance at current levels.

Update on August 24: Sorry to say, I posted the wrong chart above this post. Take a look at this post on August 24 to see the correct chart and my updated view on the situation.

Guesstimates on August 12, 8:30 am ET

S&P: The 1227 level is support and the next step up will carry the market to 1268.

Bonds: Resistance is now 115-04. So far we've seen a rally of one box so it is too soon to conlude that a new uptrend has started.

10 Year Notes: Resistance is at 110-30. So far the market has rallied a little more than one box so it is still too soon to conclude that a new uptrend has started.

Eurocurrency: The market is now headed for resistance at 123.60.

September Crude: Headed for the top of the next box at 66.30. I still think the next big move will be downward.

Gold: Will stall at the top of the box at 456 but I don't think the market will react more than 1/2 a box.

Google: 280 is support; the next move up will reach 343.

Has It Started ?

As you know I am expecting a big move upward in bond and note prices over the next few months. I think the T-bond futures will make it into the 121-123 range and the 10 year notes into the 115-116 range.

You can see today's price action in the updated hourly charts above. I have been wondering whether or not the big move I have been expecting has already begun.

I must admit that I really don't have any conviction about this. In the last couple of daily guesstimates I said that the bonds would have to move above 114-22 and the notes above 110-16 before I would consider the possiblity that the upmove has started. As you can see these levels were broken this afternoon after the 10 year note auction results became known.

From this I conclude that the bonds are headed for the top of the current box at 115-04 and the notes to the 1/2 point of the current box at 110-30. After these levels are reached I will look for one of two developments, either of which would convince me that the bonds and notes are headed up big: the markets blow right past the box levels I have just cited (unlikely) or both markets react a half or 3/4 of a box downward and then turn up once more.

Google

In my last post on Google I said that GOOG should find support at 280 and then begin a move to 343. The market reached that support level today and an extended rally should start now.

Gold

Earlier in the year I predicted that gold was headed over 500. More recently I have been predicting that December gold was headed for resistance at 449. Today the market blew through that level and so I think the next reaction will begin from the top of its current box near 456.

Guesstimates on August 11, 8:45 am ET

S&P: The 1227 level is support and the next step up will carry the market to 1268.

Bonds: Still likely to drop to 113-06 but for this to happen resistance at 114-22 must hold.

10 Year Notes: Still lkiely to drop to 109-18 but for this to happen resistance at 110-16 must hold.

Eurocurrency: The market will drop to support at 122.70. Resistance is at 124.60..

September Crude: Headed for the top of the next box at 66.30. I still think the next big move will be downward.

Gold: will reach 449 soon and support is at 436.

Google: 280 is support; the next move up will reach 343.

Crude Oil

I thought that the top of the box in September crude oil at 64.40 would hold the market but after a reaction crude oil headed even higher. Now I think the market will reach the top of the next box at 66.30 before rolling over.

The top of the long term box is at 70.40 but I don't believe crude will get near there before a bear market begins.

Sears Holdings

Here is an updated daily chart of Sears Holdings. The biggest reaction so far was the 25 point drop in early June. A similar drop from the recent high at 163 would carry the market to 138 which is also the 1/2 point of the current box. From there I think SHLD will rally to the top of the next box at 173.

S&P

Here is an updated hourly chart of the September S&P futures. It shows all the pit and overnight activity for the past three weeks as well as the boxes for the uptrend that began from the April 2005 pit low at 1136.80.

Monday the market again bounced off the bottom of its current box and I think it is now headed for the top of its box at 1268.

Guesstimates on August 10, 8:45 am ET

S&P: The 1227 level is support and the next step up will carry the market to 1268.

Bonds: Still likely to drop to 113-06 but for this to happen resistance at 114-22 must hold.

10 Year Notes: Still lkiely to drop to 109-18 but for this to happen resistance at 110-16 must hold.

Eurocurrency: The market will drop to support at 122.70. Resistance is at 124.60.

September Crude: Has nearly reached the top of its box at 64.40 and the next big move will be downward.

December Gold: will reach 449 soon and support is at 436.

Google: 280 is support; the next move up will reach 343.

Fun With Baidu.com

The markets are dead dull as they await the Fed announcement at 2:15 pm ET today.

In the meantime I thought I would have some fun by taking another look at the price boxes for Baidu. com. I have previously commented on BIDU here and here.

I've posted a 15 minute bar chart of BIDU above together with the 27 point boxes which start from its IPO price of 27.

In my first post on BIDU I guessed that it would find support at 108, the bottom of the box that it closed in Friday. That level was broken this morning and is now temporary resistance. BIDU will now drop to the 1/2 point of its current box near 94 and then stage a big rally.

Google

I thought that GOOG would hold support at the 1/2 point of its current box but as you can see from the hourly chart above it didn't.

It now looks like GOOG will drop to 280, the low it made in the after - market following its last earnings announcement.

I still think GOOG will move up to 343 over the next few weeks.

Guesstimates on August 9, 8:50 am ET

S&P: The 1227 level is support and the next step up will carry the market to 1268.

Bonds: Will drop to 113-06 and then begin an extended up move.

10 Year Notes: Will drop to 109-18 and then begin an extended up move.

Eurocurrency: The market has support at 122.70 and the next step upward will carry to 124.60.

September Crude: Has nearly reached the top of its box at 64.40 and the next big move will be downward.

December Gold: Will reach 449 soon and support is at 436.

Google: 292 is support; the next move up will reach 343.