Rough Times ahead. Irrespective a bottom may be in the process of forming.

S&P 500 STRATEGY: STAND ASIDE (for definitions of terms see end of report)

Unlike the NASDAQ, the S&P 500 fell on the week. But as with the NASDAQ, there are signs that we could be in the process of making a bottom. The previous week we had a huge outside reversal (we won’t call it a key reversal because we were not making any major new lows although we made a new low for the move down). Big reversal weeks are often a sign of a bottom. Indicators are turning up from oversold levels. Overall we don’t have any major positive divergences on the weekly charts although we have clear ones on the daily charts.

Our best argument for the possibility of at least a good intermediate bottom is our cycles. The cycle that we appear to be following this decade is the 1930s. There was a major top in March 1937, a secondary top in August, then a financial panic. The first good low was made the first week of April 1938. We had a top in July 2007 (and interestingly a lower temporary top in late February 2007), a secondary higher top in October 2007, then our financial panic.[read more…]

TSX INDICES

The TSX Composite gained 3.6% this past week and all sub indices rose. Still we did not generate any new buy signals so officially we are still for the most part in a stand aside mode. Traders may wish to look selectively for bargains. The golds were beat up thoroughly the previous week so their short term has turned down. Most of the sub indices that were up on the week have seen their short term indicators go form down to up or at least neutral.

While we are seeing some signs of a possible bottom we can not come right out and say buy this market as we will require some more backing and filling and to actually form a bottom before we could say buy this market. [read more…]

ROUGH TIMES

One of the dangers of being a contrarian writer is when suddenly what you have been writing about for some time becomes the headlines. We expected a financial panic in 2007 and said so, and while it took time to materialize and while we didn’t know precisely what might cause it, the
fact is that it happened when many (we say the vast majority) were either blithely unaware or mocked the doomsayers.

So now what do we do? Write about how we were right? Or write about the headlines?

Writing about how we were right makes no sense because predicting disaster is no fun, even if it was obvious in coming. Writing about the headlines is difficult as well, because now what you were writing about is fodder for the six o’clock news. [read more…]