July 15th, 2009

"That’s All Folks"

Wow, what an opening this morning. Fifteen minutes into trading and the S&P is up 1.54%. As far as the head-and-shoulders top everyone was talking about last week, well, as Porky Pig used to say “That’s all folks!

The neckline for my long-term inverted head-and-shoulder (see “Market Future is in Eyes of the Beholder“) at 950 is only 3.2% higher than the current 920. I thought we’d cross above around Labor Day but it could be earlier. On this score, however, I’ve willing to be proven wrong.

This is getting exciting. Stay tuned. (I hope I’m not going way out on a limb, that it’s not wishful thinking and that the market won’t disappoint again.)

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  • Anonymous

    ok, read both posts, not sure i understand based on your posts; are you saying that based on long-term inverted head and shoulders, taking out the 950 we are heading higher? Or is that the point, by examining two head and shoulder patterns you are waiting to see the dominating trend/pattern?

  • Guru

    Sorry for the confusion. I've been looking for the work on the right shoulder of the inverted head+shoulder to make some headway and I thought today's great market a significant step in that direction. I'm tying myself down so I stick with my discipline and wait for the final hurdle to be crossed .. breaking above the neckline of that inverted H+S.

    "That's All Folks" comment refers to the failed s-t H+S pattern that everyone was so proud to have discovered. I didn't believe it and didn't think it was tradeable.

    Actually, hesitation at this point is warranted because perhaps half today's move may have resulted from all those who shorted due to the failed H+S now had to run and cover.

    The market is a mere 17 points (less than 2%) away from the neckline. Here's the scenario I see I see unfolding: 1)a cross, 2) move to 1000-1025, 3)naysayers come in to halt move, 4) a "traders' remorse" retracement back to 950, 5) the full-fledged bull market returns in 2010 with the market ultimately reaching 1300-1350 early 2011.

    But what do I know. I may only be dreaming. Your guess is as good as mine

  • vanderpool

    Guru,

    While the dramatic rise in stocks today is welcome,
    many pundits warn there is not convincing volume.
    What sayeth thou?

  • Guru

    Volume today, while not exceptional, did help the On-Balance-Volume indicator to continue moving up…clearly a good sign. Things won't start perking until the Index moves into new high territory (i.e., above 956). The first move will only be about 5-6% (to 1010) when the market will correct back to test the breakout level.

    Don't know how long that will take (perhaps to Labor Day) and then when the deluge of sideline cash will truly begin.

    So I hope.

  • Charts and Coffee

    Guru, I've enjoyed your posts. You have been providing a well thought out bullish perspective as of late.

  • Guru

    Charts and Coffee, thanks for the feedback. I only call 'em as I see 'em.

  • Anonymous

    Pre-Lehman bankruptcy and the S&P 500 was 1250..XLF was 20,xle was 70, xlk was 21 (almost there).