Oct 20

Weekend Outlook for 22th October 2012 – Finally the topping pattern starting to play out!

Markets had a pretty good bounce early in the week , but this was pretty much expected because:

1. Markets were extreme oversold short term , indicating some kind of bounce was likely
2. SPX were reaching MA50 for first time in many weeks , USUALLY we get a bounce from those before we break them. This is what we got early this week.

But as I stated many times, SHORT the bounces , they will be short lived and we are going lower , told members that I were expecting a hard reversal to downside again by mid this week after the 2-3 day bounce and Thursday/Friday we got the reversal + confirming to downside.

We actually nearly took out the MA50 on SPX already , we closed right on it as I also mentioned in the chat room was very possible over weekend – but eventually we will break below it starting next week imo and then the real panic will start to set in.

Here are some thoughts:

1. Dollar UUP made a bullish reversal to upside and looks like it will go higher next week , this will put a downside pressure on markets.
2. TLT made a 100% clear bullish reversal too on Friday , got down to trendline and then bouncing nicely of it, I think TLT will move higher next week which will set a downside pressure on markets.
3. NDX and IWM , Techs and small caps leading the way down , this is a BEARISH sign, both of these indexes is at MULTI WEEK LOWS ending this week – and they usually lead up and down. Very bearish for SPX.
4. VXX has been trading in a bullish falling wedge over the past WEEKS ,, since September – this one will imo breakout to the upside which will result in lower prices still in markets.
5. Weekl charts still screaming SELL/SHORT all you can and I see 100% no reason to get bullish near term, before SPX can break above 1460 again. 1475 seems to be the top , probably the top of the YEAR – because the huge bearish divergence on weekly charts.
6. AAPL still very weak , I’ve called AAPL to see 600$ next and I believe it will hit this level next week , I wont rule out it can go lower to 560-600 level before bottoming out.
7. COMPQ had a clear top hs pattern I indicated for members and I think we will see it reach the target sometims next weeks , so I will not go anything low at least before we hit this zone,, and probably a bit lower.

All in all – what to expect for next week is more downside , I think a bigger sell off started here on Friday with the huge down day in markets – as soon we break MA50 the next SPX target is MA200 at 1370s ,, should be reached in next 2 weeks.

Short the bounces imo as we still got more downside and looking on my weekly charts they suggest we might have a VERY nasty week , this week. So lets see how it plays out , but it for sure does not look good. REMEMBER a TOP IS USUALLY A PROCESS ,, NOT 1 day event usually , and this is what we have seen September/early October. I believe the topping pattern playing out now and we see follow through to the downside near term.

 

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