Well, alot of what will happen in the markets depends on the price action that will happen early next week. Despite what I think will ultimately lead to a 'death spiral' in the markets, I somehow don't believe that the death spiral is upon us yet. I think the powers that be will try their best to delay this death spiral, which should ultimately lead to higher energy prices due to money printing, and that's when a real death spiral will occur as the powers that be cannot print their way to lower energy prices.
Anyways, looking at the SPY chart, the markets ended Friday on a very sour note, however, it is resting on an ascending orange trendline, that dates back to July 2009. It also filled the gap from the previous Friday's gap lower, to Monday's gap higher, making the SPY sitting on some kind of support. If the market has any chance of recovering (in the short term) it must stay above this orange trendline, otherwise this death spiral in the markets will occur much sooner than I anticipated. What happened with the 1000 point plunge in the Dow, and the market selloff last week really caused lots of fear in the market. If you look at the chart of the USD (not posted), it's at new highs for the year and really extended upwards. Considering the huge rally in the USD, I'm surprised the market didn't really tank further. Anyways if the USD pullbacks, expect the rally to rally.
I charted the SPY on the weekly chart, and noticed that there is a descending 200 week moving average at about 123. I will make a revision to my forecast of the SPY. We'll be lucky to hit 125 on the SPY, before the market in all likelihood starts crashing down. (Just look at what happened between July 2007 and October 2007)
No comments:
Post a Comment