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Sunday, May 10, 2009

Outlook for week of May 10th

I have blogged that the market is a bit over-extended on the rally upwards.
Also that the rally is "days to couple of weeks" before it rolls over.
I have been hyping "any day now". Now I'm starting to think it will be no later than 1 week from this Monday. Why? This Saturday the 16th is options expiration. And significant turns happen during options expiration weeks. I'll do a double post back to back also on what will make the government pull the trap door and hang all the people in equities.

For those of the readers invest by buying or selling once or twice a year, choosing the "exact top" to sell is foolish, anything starting now is excellent time to sell.

For those trying to catch a reversal, SCALE into the position, if/as we rally higher, you can add to your shorts or ETF's to catch a reversal.

Once this top hits, this may be THE TOP of the market for the next 5+ years. This is no-joke folks. If the market breaks the lower level established earlier this year, its pretty much game over for the market.

Unfortunately for me if/once the market goes to the next leg down, once the market hits the next low, whatever that is, I think the market volatility will be reduced. And investing on a day-week-month-quarter level is profitable when trading around significant volatility. So this may be the last hurray for "quick money" and we will enter the slow bleed up for resource based stocks.

Why do I call this market volatile? Lets look once again (I beat concepts into the ground until you don't want to read me anymore) at the S&P

S&P 500 is up 40% currently in 8 weeks. What we are looking at is a parabolic blow off of possibly up 50% in 9 weeks. From 4/03 to 4/07, the market went up 50% in 48 months.

50% up in 4 years is a BULL MARKET. That is what "normal" people invest in. The goal is to Buy low and sell high. Buying in 03 and selling in 07 is a good WIN.

Lets look at current market. Buying (or holding your losers) since 8 weeks ago to today, up 40% is a WIN. Lets assume we enter complete parabolic blow off, up 50% in 9 weeks.

Question is, why not sell? You are looking for 60% in 10 weeks? Also notice the chart in 01, and 02 market action. Doesn't those "Shapes" look more like what we are seeing now? Notice the market resumed its down trend.

Get the heck out of dodge before someone yells fire and there is a stampede for the door. IF you are greedy and believe we will see up 100% in the next few months, sell 25% of your investments (NON resource based). You'll be glad you did if I am right, and glad you didn't sell 100% if your right. But I am right. :)

(See disclaimer on me stating I am right, click here)

If your a gambler, like me, enter short positions, buy very very long term puts on market indexes (like 1-2 years out), buy higher risk ETF's on double inverse shorts, such as TZA, QID, and DXD.

See charts below.
There is no such thing as a free bailout, and the losses MUST occur. The government hand will be pushed to recognizing market decline.

From WebSurfinMurf's Financial Blog

From WebSurfinMurf's Financial Blog

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