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Monday, June 1, 2009

Bull vs Bear

OK, I am getting tired of this market skipping along taunting the 200 DMA line. Just get it over with and lets hit that 200 DMA. The question is, once done, will the market decide its time to go another +40%, or time to retreat?

Lets take a look at some graphs. Back on 3/5/09, I posted about the market likely to run back to the 200 DMA. Then on 5/10/09, starting giving warnings that we are near a top. A top mind you that we have not yet broken since. For the last 3 weeks the market has been playing games , taunting the lower and upper boundaries for a bull or bear run.

On Friday, the games continue with the S&P futures spiking very hard almost to the 200 DMA to 927.50. The 200 DMA was about 928 on Friday, so basically it touched, being within 1 dollar. Today I have three graphs. First is a close up of the S&P 500, and where the significant price lines are. Second is S&P 500 since 1992, and the 50, 100, and 200 DMA lines.

The last is very interesting. It is a graph of S&P 500 "inflation adjusted", ending on March 4th, 2009. (lifted from this article) Using inflation adjustments, the US Stock market hit 1992 valuations already. So the question is, how far down does this rabbit hole go?

I think it is possible the S & P 500 finds a bottom approaching 1985 "inflation adjusted" levels.
In any event, I am not satisfied yet that this market has shown us if it's time to tank, or rocket higher. I said it last week, and now I'll say it again, the market will choose a direction, and I think its this week. But then again, I have thought that the last 2 weeks. Maybe the market will remain in this range for 52 more weeks, but I doubt it.

The shorts are doing OK, the lottery tickets not very good. I'll update both early this week in a post.

**NOTE** Gold, Food, Oil have all been rising, the "inflation trade" may be starting. If inflation takes hold, the market will rise, but standard of living will decline, and so will profits. Also housing will do much worse as interest rates rise. I think its too early for this...but who knows.

From WebSurfinMurf's Financial Blog

From WebSurfinMurf's Financial Blog

From WebSurfinMurf's Financial Blog

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