Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Is the Stock Market Topping Again?

Stock-Markets / Stock Markets 2010 Jul 29, 2010 - 09:54 AM GMT

By: David_Banister

Stock-Markets

Here at TMTF, I enjoy making controversial calls based on Human Behavioral topping and bottoming patterns, often referred to as Elliott Wave Theory.  This is a difficult pattern recognition model to follow as there can be numerous interpretations.  Instead, I look for additional clues like sentiment indicators, a few traditional technical indicators, headlines in the news and covers of papers etc.


Recently I saw an article on Bloomberg indicating that short positions were at two year lows, with the ratio of longs to shorts at 2 year highs.  Those types of indicators I use to help confirm if I’m on the right or wrong track with a forecast.

Right now I think the SP 500 and markets are topping in a counter-trend ABC-X-ABC rally that really started with the May 25th lows of 1040, to the June 21st highs of 1130, back to the Jul 1 lows of 1011, and now to 1121 so far the highs.  That 1121 number is a Fibonacci 50% re-tracement of the 2007 to 2009 highs to lows, and just 9 points below a 61% re-tracement upwards of the April highs to July 1st lows.  Evidence mounts now that August could prove tough for Bulls and some risk aversion here is a good trade in my opinion.

Back in late June I saw similar sentiment and Elliott Wave topping patterns in Gold as well.  The headlines were bullish, the talking heads on CNBC were all saying to buy any dip in gold and stay long.  A 21 month rally was topping and I went ahead and stuck my neck out and predicted a multi month correction.  Since then Gold has dropped from $1243 to $1158 at it’s recent low, and should be heading to $1043 eventually if I’m right.  It takes awhile to knock the sentiment down from overly optimistic levels, just like with the SP 500 top in April which I forecasted in mid April as well.

The SP 500 would need to clear 1130 aggressively for me to cave in and call 1011 the bottom.  That was a 38% fibonacci re-tracement of the 13 month market rally, and it’s possible that was the bottom for sure.  Normally though, you would at least get a re-test of that low, and possibly a drop to 942 area on the SP 500 which is a 50% fibonacci re-tracement of the 13 month rally.  In addition, the pullback so far only lasted about 8 weeks relative to 13 months of rally, so I think there is another several weeks yet before we can call a bottom in 2010.

Below is an interesting chart showing recent action since late May in the SP 500 index.  Investor’s like to act in patterns and this seems to show a good one.  Best to you and your trading!

If you would like to learn more about our market forecasting service, please go to www.markettrendforecast.com to sign up for free reports and to see what we offer.

Dave Banister
CIO-Founder
Active Trading Partners, LLC
www.ActiveTradingPartners.com
TheMarketTrendForecast.com

Dave Banister is the Chief Investment Strategist and commentator for ActiveTradingPartners.com.  David has written numerous market forecast articles on various sites (SafeHaven.Com, 321Gold.com, Gold-Eagle.com, TheStreet.Com etc. ) that have proven to be extremely accurate at major junctures.

© 2010 Copyright Dave Banister- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in