DOW 10256.02 -16.25 -0.16%
S&P 500 1107.30 -6.59 -0.59%
Nasdaq 1920.15 -38.63 -1.97%
A word of caution to those market timers out there.
We are now moving to the historically bad performing 6-month (May to Oct) cycle. As Mark Twain said, "history never repeats itself, only rhymes."
Following up with my previous post, I am beginning to think the cyclical BULL is over. S&P 500 peaked at 1156 on March 5, 2004, an increase of 45% from the low of 800 on March 11, 2003. I unofficially marked March 11, 2003 as the start of this cyclical BULL. If March 5, 2004 is indeed the end of it, then it lasted 359 days, which matches the characteristic of the previous 17 cyclical BULLs.
The reasons why I think the BULL is over is because in 2004, S&P 500 touched the 1150 mark four times. Interestingly, once every month in the past four months. Non-conforming pattern from RSI and MACD each time S&P 500 reached that level is what caused me to think the top is completed--the index will never reach and break above 1150. DOW chart shows a slight different story, but same conclusion. NASDAQ has the worst chart of all--it is now below it's 200-day moving average after Friday's close.
Overall, the three major indices are showing signs of major weakness. I am not saying the market will not move up from here. As the top is complete, we will not see these levels for years to come. The BEAR has awoken. Get ready for the turbulence as the BEAR and BULL duke it out in May. I don't know how long the fight will last, but I am sure in the end, the BEAR will prevail. And the BULL will be no more; the secular BEAR continues. To that, I suggest buying some PUTs to protect your profits, as well as making some during the coming down cycle, which I believe will be more vicious than the 2000-2002 cycle.
But don't despair. Cyclical BULL will show up again, and give longs another 50+% upside advance. During Japan's last 12-year secular BEAR run, cyclical BULL emerged 3 times, bring 50~75% upside in each of its appearances.
posted by jason @ 9:41 AM
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