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Market At Long Term Support at Trader’s Narrative




Market At Long Term Support


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The market seems to be holding on for dear life at a long term support level. The mid August 2007 low on the S&P 500 Index (SPX) was 1370.60 and in mid March 2007 at 1363.98 - we closed today at 1373.20

But when I say long term, I mean really long term. As in back to the start of this cyclical bull market. Back, all the way to 2003:

long term support dow jones january 2008

Looking at things through this chart, not only are we at a major cross roads, the market looks like it has just printed a triple top or head and shoulder formation (squint if you can’t see it). Need I say that looks ominous?

And to complete the trifecta of bad technical analysis news, reknown chartist Stan Weinstein drew a line in the sand for the Dow, back in September 2007 (thanks Tom). He said this in an interview:

… my new level is 12,800. If at any point the Dow breaks down and closes - at the close below 12,800, that would turn what’s a problem market into a much bigger problem.

So there you have it. Things look bleak. Now is this the doom and gloom before the sun comes out again? is this the “wall of worry” that a bull market climbs? or is it the real deal? should we sell everything, buy gold and move to Montana?

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5 Responses to “Market At Long Term Support”  

  1. 1 Johan

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    Looking at todays market, one would say oooops!

    I think I might try to buy little at close today. But only for a short term. Longer term a will add to short/sold positions.

  2. 2 wes

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    Well, it’s much easier to trust market lows where long term support has been broken and, presumably, weaker hands have been chased out. I think the failure to find a low that holds for more than a day or two is due to a lack of fear, but I keep reading that there’s too much fear in the market.

    That just doesn’t make sense to me.

  3. 3 Tom

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    What’s happening is the massive “liquidity” premium in the market is being wiped out. You won’t get a bottom till its burned off, but that won’t happen because Ben is throwing more liquidity into the market.

    My target for the S&P500 is around 1250, a break below that could spell the complete wipe out of the 5 year Bull Market.

    PS: I’m selling my property in Montana and gold. Anybody want to buy? :)

  4. 4 wes

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    After reviewing a few indicators tonight, I am finally seeing FEAR.

    While pigs don’t fly, I’m looking for pork chops in the tree tops tomorrow.

  5. 5 Scoad

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    Amen- how can holding support be bullish when every couch potato is a crack chartist [just watch those brokerage commercials- theres mom trading the vix] the charting software flys around alot more than those pork chops {unfortunately} and everytime you clik on a financial post charts jump out looking for attention.
    Sell gold in a little while and buy property a little later- maybe or maybe not montana.
    Babak if you get a chance to review the poor, poor down and out, Skid Row SOXX it would as usual be very interesting- thanks

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