Bloodied bears should ponder the chart below before they surrender to the notion that stocks will continue to rise more or less forever. The first thing to notice is that the crash that followed October 2007’s all-time high came at a time when the Dow average had just pushed into the ozone, moving decisively above 14000 for the first time. It’s not hard to imagine bulls getting pretty fired up back then — and bears getting ready to dive into their bomb shelters. It looked like a moon shot was under way, and, based on our proprietary Hidden Pivot method, we’d have laid odds that the Industrial Average was bound for at least 14600. Instead, the Dow peaked at 14198, 400 points shy of the target, before commencing an epic collapse to 6479 over the next 17 months.
The similarity between the topping pattern traced out in 2007 and the one taking shape now is hard to miss, as the chart shows. The main difference is that the earlier pattern was more massive. This time we are projecting a rally to at least 10886 on the Dow, exactly 118 points above yesterday’s high. But based on the way the stocks have been acting in recent days, we would expect more than a mere 118-pointer. For in fact, the rally has been shredding its way past Hidden Pivot targets in mere hours when those targets should have contained the move for at least a few days. Yesterday, for instance, we told subscribers to short a “hidden resistance” at 1161.00, using a stop-loss at 1162.25 that left us exposed in theory to $62.50 of risk. By day’s end, however, the futures had traded as high as 1165.50, implying that buyers were not even breathing hard after sprinting almost without a break since February 25.
So here we are again, bearish as ever on the economy, but quite bullish on the stock market. Still, we haven’t forgotten how very bullish we were just before the market collapsed in October of 2007. With that lesson in mind, we’ll be looking for the very subtlest signs of fatigue if the Dow should head higher as expected. Let the run-up give way to just one microscopic, corrective abcd downtrend on the one-minute bar chart, however, and we’ll be ready to switch sides, joining the most zealous bears, in a New York minute.
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Rick, your post today is brilliant simply because you have the pride, integrity and guts to objectively state the limits of any kind of market analysis.
People who expect infallibility belong in Church, Congress or Court, whoops, not there either.
In fact, with Rick’s permission, posting a website below to point out Bailout Stim and 0Care may not only create more destructive debt leading to everyone else, as well as intelligent retail clients, to sell bonds, commodities, metals, real estate and stock to hoard scarce remaining cash during the collapse of the giant government Ponzi usury scheme. Many perceptive retail clients got out in 2000 and 2007 and are not coming back for decades, if ever. They realize government markets became a giant casino vacuum cleaner wealth transfer mechanism sucking cash out of their pockets and depositing it on Wall Street and Washington, DC.
Only a very few can beat DC and WS at their game.
WSJ said Madoff got beat up in prison for his Ponzi and officials deny it.
Our leaders and their media deny a lot more too, creating and promoting a fiat money liquidity-driven bull trap that rivals the ones in 2007 and 2000 and may end like musical chairs, if declining money supply is any clue.
Why not read this rare common sense?:
http://defeatthedebt.com/take-action/
Aloha Regards*Rich
Regards*Rich