Friday, May 8, 2009

Looks like the 200 MA Is Our Target

I figured we get there. I just thought it would be part of our C wave of primary wave 2/B. But it seems to be apparent that the market wants to get there. A move below yesterday's low will likely leave any bulls going for this target trapped, so it is a possibility. However, it seems that no matter what happens during the day morning session, the market likes to push higher on lower volume and then stick it to the bears the last 15 minutes. We're very close. I have to be the over hanging supply at SPX 943 is HUGE. Looks like it will coincide nicely with the MA creating the perfect storm for stocks to move significantly lower.

For now I'm not updating the count. The moves are getting incredibly messy. Once we break key support, I'll provide the count. Until then, I fully expect 943 to be hit intraday next week (but it doesn't mean I'm long!)


  1. Hey Rich...Tom again...yep, no doubt we are heading to the 200 mva. Go back to last year at this same time frame (March - May 19th) and view your charts. Freaky scary huh? Could it all happen again?? Let's examine this 200 mva for a moment.If we go there (may even poke thru it) and get rejected..I would say we go down 38%, or 50% or even 61%. But if we hold there, test it, and then proceed up...would you then say we are in a "new" Bull Market? Also...look at the bottoming process we went thru in 2002-2003. Some say the Oct 2002 lows = March 6th 2009 Low and we are at the late Nov 2002 highs have a slow grind down during the summer, to hit a low in the Fall/Winter time to Rally back up again to the 200 mva. That 2002-2003 was a huge Inverted Head and Shoulders pattern...we might be forming the same thing. Now look at the 1974-1975 bottoming process which started late 1973 and fell 45.1% (close to our current bear decline). When she hit the 200 mva, she paused slightly, then took off a total of 75.7% from the Dec 1974 low to the 1976 high.
    My point here is the 200 mva....seems to me it is "The Key" as to what direction this market will follow. Rejection=Bear. Go thru and retest and continue Up = New Bull Market.
    I appreciate your comment.."not updating the count"... have to wait and see what the 200 mva will bring

  2. Tom,

    I am working off of charts and patterns that work their way back before our country even existed. The cycle we are experiencing is nothing so little as any of those bear markets. I fully expect the bounce off of the 200 MA to be temporary. I fully expect the S&P to hit a 1000-1100 target later this year. However, once it is through, we will realize that earnings have never improved and have actually gotten worse. Our economic recovery will never have happened. And the trust and faith that the gov't bailouts will have worked will be in vain. I don't know what 'the' event will be that will kick off this realization, but that will be start of primary wave 3/C. That will be pure stock market devastation. There has NEVER been a time in history where a credit bubble didn't end in complete financial destruction. We have created the biggest global credit bubble in the world. 10-100x the size of the one that caused the great depression. We have already seen nearly 10 TRILLION dollars in wealth vanish. We have 'printed' nearly that much more to 'save' the system. All of this comes at a cost that must be paid out of future growth. It is the anchor around our neck. The system will only right itself when the American people have paid down or discharged their debts and put money in the bank. That will take years to accomplish. The decade patterns are all in alignment. The last grand supercycle took 60 years to correct. Even if it takes us half as long, we still have 20 years to go. That doesn't mean we won't have multimonth bull rallies. But the overall trend will be down for a very very long time. One last thing, every major bear market has never ended until the PE ratio for stocks was in the single digits. The S&P could drop in half from here before things look cheap, and that is assuming earnings stay the same. If earnings get cut in half from here, then the market could drop another 75% before we're done. It is important to put these things in perspective.

  3. Brilliant...absolutely brilliant! I agree completely. My comment we will go into a new Bull Market...I meant to say a "new Bull run"...a run, not a market. I agree about the 1100 area. I see us flirting around the 200 mva, dropping thru the summer months, then back up to the 1100 area....and that might be it!
    Again...great History post

  4. Agreed....really insightful comment Rich. Nice job.

  5. Also Rich, sorry, not that good at reading the numbers on your chart, but what count do you see us in of Primary 2? Are we still in Intermediate B or C of Primary 2?

  6. MikeT, - my count is that we are currently in intermediate wave A of primary wave 2/B. My current count is that intermediate wave A is a triple zigzag: abc-x-abc-x-abc (w-x-y-x-z), but until we get a nice correction with follow through, we won't know the count for sure, which is why I opted to stop updating the count and wait for the correction to occur, which should be very close as the 200 MA along with 940 is right overhead..

  7. Thanks Rich,
    Any predictions S&P wise what the targets will be on the S&P by the end of C? I think originally werent they saying in the 1000-1200 range, but with this aggressive wave A, I assume it puts it much higher now?

  8. MikeT,

    When making the broad projection, I look for the key retracement levels that might coincide with key resistance lines. The obvious ones are the 38.2% and the 61.8% retracement lines at 1010 and 1222. Once we have our intermediate waves A & B complete, then I'll also look at key fib relationships between A&C to make a projection of C that might line up nicely with the broader projections. I first look for wave parity (1:1), then 1:.786 and 1:1.382. I'll also look at 1:.618 and 1:1.618. I hope that helps.