Stock-Market-Observations

MY CHARTS

WHAT’S HAPPENING?

A friend asked me about buying last Friday.  My response was, without a rally, never buy the market after Wednesday.  The exception is to buy in the last couple of hours on Friday, but only if the count is right and the market shows definite signs of a turn.  This could represent a rally beginning on Monday.  We saw none of these qualifications met on Friday.

The problems bothering the market tonight are the slowdown of the US economy and the governmental change in France.  Both of these problems are likely interlocked.  The french government change “could” also affect the EU bailout situation .  France becomes the 11th European governmental change during the EU crisis.

05-06-12 SP FUTURES 55 MINUTE BARS

In the above chart you can see that the downtrend lines are still active.  I had previously thought we had left these lines behind.  The following chart shows the origin of those downtrend lines.

05-06-12 SP FUTURES 80 MINUTE BARS

It’s “possible” the market could rally tonight and then decline one more time.  That would mean the decline that began on May 1st could be getting close to over but that wouldn’t necessarily mean the overall decline is finished.  Watch the count on the shorter term charts for an indication of the end of the decline.  Let the channels rule your count and they can be quite narrow on a shorter term chart.

05-06-12 SP FUTURES 30 MINUTE BARS

We stopped on one of the fan lines on Sunday night.  We’ll see if that turns out to be valid.

Worst case scenario:

We have ended large step 3 up counting from May 2009.  This is NOT a likely scenario but it’s possible.

We have a significantly higher high than step 2 and this is all that’s necessary to qualify for third step.  An early end to a step is normally caused by something happening that the market hadn’t anticipated.  In the SP 500 chart, 3rd step ended in July 2007, while 3rd step ended in October 2007 for the DJ Industrials.

The July and October peaks were caused by much earlier events.  It was the February 2007 plunge in the market that was the first indication and sudden awakening of the informed few that major problems were coming.  The rest of us blithely went about our lives unaware of how bad things were going to become.

The EU problem is the type that could suddenly erupt into a chaotic situation.  I also wonder if the market could be wondering about a republican victory in November as this is an unknown.  Unknown in that we don’t know what type of austerity programs could take place.  Presently, lower tax receipts have austerity striking state and local governments.  Unemployment is rising in the government sector while jobs are being created in the private sector.  As usual, we wait and see.

05-06-12 SPX DAILY BARS

I try to update MY CHARTS daily but occasionally I have other things that become more pressing and I become neglectful.  When I do forget to update, that’s a good time for you to take a stab at it and see what I’m going to say later.  I’m not always right so your interpretation could be valid.

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This entry was posted on May 6, 2012 at 9:13 PM and is filed under UPDATE. You can subscribe via RSS 2.0 feed to this post's comments. You can comment below, or link to this permanent URL from your own site.