Tuesday, July 3, 2012

This Week & the 8/4 Test

So the market (SP500) finally made a high above mid June's high. This resulted in a lot of stops being triggered, especially these two short recommendation:

1- Elliott Wave short trade
2- Goldman Sach's short trade

Most of the investors who were involved in this short trade have been pushed out by the market. So now the market can comfortably start its decline phase.  When we first came across these two short recommendation in the midst of an incomplete IPM turn date top prediction, these recommendations were taken as a contrarion signal. This is because both of these recommendations came from very influential firms. Since these firms command so much respect among the investor community, I thought that a lot of people will act upon these recommendations. 

However, since the market only rewards a small majority, I though that these two short recommendations should be treated as contrarion signals, meaning that market could rally soon. Long behold, this is exactly what happened. 

Reasons for Potential Market Top (soon):
1- IPM Turn Window in process
2- Markets are in process of setting up the 8/4 test on a monthly time frame: IF April highs are not broken soon then we could be in for a decline to mid-to-high 1100s.
3- Sentiment is still not pessimistic to result in a sustainable rally. In fact, it is getting optimistic again!!
4- Elliott Wave structure looks very complete, and is ripe for a decline.
5- Technical indicators are showing divergences on this latest rise.
6- Supporting markets are showing signs of weakness

A special July trading "Strategic Analysis Map" (Flow chart showing all the possible scenarios, conditions, strategy, rationale, along with IPM Turn dates) has been created by the UST team. It will be published soon on this blog. If you want it immediately, please contact:

Note: A decline below (SP500) 1356 could be a sign that the market has topped. According to latest IPM re-run, July will be a 2-part month. Decline first, rise later. This will be followed by a dangerous August. We are planning on soon publishing a "Market Road Map" for July also like was done for June. If you want it immediately, please e-mail us at: 


  1. Thanks Naqvi. Your analysis sort of follows Jeff Macke at:

    And more from Jeff Macke's website (markets for the rest of the year): with Jeff Kleintop. His hypothisis is that the market is already moved 7-8% and it doesn't have much more. Interesting interviews.

    Just some food for thought. Me personally, this is going to be a wicked summer and I think the "sell in May, come back in September" is going to be late this year (and the dynamic is changing). I still think it will happen starting with a deep dip in August. The reality for me is that the market is based on "hope". Hope for the EU, hope for QE3, and no details explaining why everyone is so hopeful. Wait for the hope to ware off and start to look at purchasing (I think this "ware off" will happen in August). Just my thoughts. Be careful out there. Brad

  2. I sold some equities on Friday and Monday already. I'm going 20% equities and 40% cash and 40% bond, mortgage and fixed until the next decline so i can buy. I think the S&P needs a major decline again.



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