Wednesday, March 14, 2012

Curious Market Action

Market is defying all odds and continuing to rise. It seems like the support that market was getting from Euro and gold has vanished. The Euro has completed its 8/4 test to the downside, and is ready to accelerate its decline.

According to EW count, US stock markets are in the last rally phase since Dec. low. Under these circumstances, it would be interesting to see what dates are generated by IPM turn model. The next turn date could be a significant top.

I remember, last time when the Weekly IPM was run in January, it said that the next weekly turn would occur after 8-9 weeks. From January, 8-9 weeks take us to the end of March. We will also re-run the weekly IPM model for better estimate.

Last two IPM turn dates:

Early February Market Turn Date: DJT, IWM, Financials, and also SPX, Nasdaq (expanded top) - Topped
Early March Market Turn date: DJT, IWM, Financials, DJIA etc bottomed

Details will be provided later.


  1. Thanks Naqvi. Brad

  2. We are so close! The setup is getting perfect by every day....

  3. With the current rally trying to find a top and the probability is increasing that the next leg will be down. Does it still hold that the market correction/decline could last 3-4 weeks before it bottoms as indicated in the March 9th post? It seems that if that were the case and with the longet this raly sputters along before the next leg, then the 3-4 week decline would take us into the beginning of April. Thanks Brad

    Also, I thought it was interesting that in the last couple of days pundits feel "forced" to be in equities, that a financial hurricane is developing that can hit as early as 2013, and that Meredith Whitney is still holding onto her claim that Munis will start experiencing defaults (that one makes sense as the Fed Gov. tries to cut the budget [lack of federal monies to states will stress states tremendously, use California as an example]). All I have to say is "Meredith for President!" At least she sticks by what she says and doesn't flip flop so that people hear what they want to hear. The honesty and conviction is refreshing. Just say'in...

  4. Thanks, Naqvi. Just a clarification, when you say "The setup is getting perfect by every day", does "setup" mean for the top, or setup for a bull rally? Your Fri Mar 9 post says "if the market breaks above the latest highs (1376 - SP500), and stays above that level for 2-3 days then one can go long."

    Thanks for the help.

  5. Is this the beginning of the leg down we are talking about?? Thoughts??

  6. So far this correction did not trigger a sell signal. So, it cannot be regarded as a serious correction. Moreover, the market bottomed on Friday (within the IPM urn window). Therefore, we might be in for some more rally, till the start of the earnings season.

  7. When is the earnings season? and how often is it? I hear a lot of reporters talk about earnings season and i know it is every company reporting quarterly but when is the earnings season? First month of every quarter? First week of Jan, April, Jul, Oct?

  8. The earnings season occurs every 3rd month: April, July, October and January. It typically starts with Alcoa, and starts during 1st or 2nd week of the above mentioned months. For precise dates, you can search earnings calender on Google.

  9. This market activity seems to have all of the indications of a "boil up" into earnings, where fund managers are chasing performance. This to me is very dangerous to be on this end of the boil up because you don't know when the plug will be pulled and the money boys pull out. When they do, it could be a violent drop. Even with all the hoopla about earnings being the best in 14 years or so, I don't agree with that sentiment. This market is propped up by the Fed and without the fed, or WHEN inflation rears its ugly head, the rally will be stopped in its tracks. The question becomes, do you venture in until earnings or do you stay sidelined to see what happens. The problem with the later strategy is that I have lost a 3o% opportunity increase since October - but that plays into the "bigger the gain, the bigger the bust".

    In my mind, with insiders trading out of their stocks (and they have been for weeks), storm clouds of inflation are thickening, summer is coming (the usual "sell in May and come back in September") and with potential problems with Europe going into recession and hitting the balance sheets of US multinationals, it seems the VERY short term is up in the markets (month or two), the longer term is down (2-5 months)and the long-term (6 to over a year) is down.

    In my view, bubbles are starting in real estate again with low interest rates and easy money, commodities, merger mania will start, but the states are starting to HURT for funds to keep their daily operations going. I think the probability to the downside as we approach summer and your guess is as good as mine as we go into Fall. Any comments? Thanks, Brad

    1. Discipline is gold. I, like you, missed this rally and i'm missing this 30% gain markets have built up. For the past months, I have been in the sidelines and will be in the sidelines until i see a major decline. Then, i will buy somewhere in June-Jul-Aug time frame so then i can catch a nice ride up the mountain (and crossing my fingers all this would come true) : )

  10. Boy oh boy, it sure seems like the markets want to go down, then within the last hour or so they give the losses back. I'm thinking this tenativeness is from the weakening overseas that will eventually impact the US markets by taking them down. Pundits are saying that the US markets will leave Europe in the dust and go up (we have decoupled), but I think we have way too many multinationals that rely on overseas revenue streams. The European weakness seems to be lining up with the summer decline too (remember, the OLD normal was leave in May, come back in September). What I don't understand is the logic behind having the Fed start/continue quantitative easing (again) to get the markets to trade up when all the markets will do is drop when the Fed cuts off the tap. Be careful out there, I'm starting to think the "good" things that were stimulating markets at the end of last year and the beginning of this year may be growing old in the market's eyes... Brad


I would love to hear from you! Please leave your comment below!!