Sunday, August 23, 2009

SPY blowoff top happening?







GS called for the SPX to be 1100-1150 sometime this year... I mentioned before that they're probably trying to sell their shares, and that their predictions are usually a little bit off. From the chart of the SPY, we smashed through resistance of 102, and the next (and probably last resistance before we crash) is at 105.6 (around 1060 on the SPX). If the market does reach that point before a crash, it would be pretty consistant with GS making predictions that are slightly above what the market is capable of doing (like oil last year). We would also have had a spectacular rally from March 09, to now, about 5-6 months in duration. I would like to remind readers that after the 1929 crash, the market staged a 50% rally from the lows of 1929 to the highs of 1930, before going on to destroy all wealth in the mid 30s. Not sure if that would happen now, but I don't really see any fundamental reason for hope. As always you be the judge.

XLE appears that is can rally just a bit more as well, which would help the SPY achieve it's blowoff top. The US dollar (UUP) appears to heading to retest recent lows, however this coming week, the US treasury is auctioning bonds, and I'm sure some trickery would happen to prop up the US dollar. One of those tricks include getting some investor to buy US treasuries to bid up the price, and then for the US gov't to buy it off this investor 10 days later, to give the illusion of confidence in the USD and solid demands for US treasuries. (Check this youtube clip
http://www.youtube.com/v/Ts5T6YTJrps )


Gold and the GDX appears to have held the ascending red line of support, and so the possible breakdown that I noted last week appears less likely, and it's more likely that we're gonna see more upside. For the past several months, it has been very frustrating to gold investors. If you look on the daily chart, we've been consolidating in a triangle pennant, and if we're able to break out of this pattern to the upside, we should see a massive run up for gold. Personally since I believe gold is money, then my bias is for an up move in gold. But again, we'll let the charts dictate what is likely to happen.

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