Mar 18

Market view for 19th March 2012

Markets this week got early this week a big push to the upside and came above 1400 for the first time since 2007-2008.

BAC came all the way up to 9-10 area ,, which NO one out there thought could happend to BAC 5 months ago when it was trading in the 5-6$ range. In August/September I had a pattern target for 9-10 area in BAC which is now fullfilled with the pattern. However I honestly did not thought it would go all the way up to this level at that time , but it took a long time for BAC to reach the 9-10 level.

FCX remains very weak and trading below 40$ ,, this is a recommended short and is going to below 25 imo in the next months ,, as long it keeps below 40 its a good short — if it gets above 40$ I would recommend to take some profits from the 45 level and above if you shorted it.

AAPL reached the 600 which has been a wall last few days on AAPL ,, will this be the top in AAPL or is it going to 700-1000 ? AAPL has been helping the QQQ and SPX going to new highs ,, but we still have:

1. Russell
2. NYA
3. Dow Jones Transports

All lagging to make new highs from 2011 ,, which is a big warning signal imo. This is not healthy.

My view is that its a long term top we are making (next 1-3 year top) and that we should see a reversal to the downside here in March. The late March looks extreme bearish in my view ,, so there is still some time , but I think the most bearish in markets would occur in late March around 22th March -> 31 March.

I’m holding tight on my shorts with UVXY.

Looking at those things:

1. VIX at multiyear lows saying NO one believes at pullback is coming and no one is hedging or shorting now,, this is usually marking tops especially when people come out with crazy targets of 1500-1800 on SPX too.
2. DAX and FTSE at major resistance levels ,, potential top is in at both ,, or a little test higher early this week before going down.
3. VXX in a MAJOR bullish falling wedge since October ,, this one should soon breakout and that would indicate the reversal i’m looking for in the markets to the downside.
4. NDX at YEARLY resistance ,, should form a major top since 2009 lows.

Conclusion:

The conclusion is that I believe this is a major top ,, a 1-3 year top forming ,, its very hard to predict the exact level where it is topping , but the top might be in or have a little further to go. But that would be the END of the rally since 2009 March bottom at 666 on SPX. What is to come is a major new bear market move down in the markets where we should take out October 2011 lows firstly ,, but I believe we are going to test the 2009 lows in the future again.

The worst in March is to come by the end of March (last week of March or from 22th – 31th March).

The Russell , NYA and Transports is all lagging below 2011 highs , this is usually not a healthy sign for markets. I believe that the entire rally from 2009 lows is done here in March ,, and not only the rally from October 2011 lows. A pattern on the weekly chart suggesting that we should see -50% of those levels on the indexes in 1 year timeframe which puts us down to 700 level on SPX. Bradley model also indicating that the top should have been in this week and a major decline into year end is coming. My plan is to hold the shorts no matter what happends as I see a reversal in markets coming BEFORE end of March. So i’m sticking to my thesis and looking for a reversal , sharp one – before end of March. Gann made a nice chart (last chart) with SPX backtest…excellent!

I still like oil going long ,, oil should imo go a lot higher with tensions in Iran/Israel and I see oil exploding up which would set a pressure on markets. Gold and Silver is also a long term buy and I see gold in the 2000-3000 range this year.





 

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