Sep 22

Weekend Outlook for 23th September 2013 – Bulls back – but early warning signs showing up!

After I expected a correction in mid August at 1700 high we got a “mini” correction from 1710 to 1627 – however the correction then was to me very little and I had expected more of this.

However as bulls kept keeping mkts higher and broke several resistances I mentioned that the correction likely ended at 1627 and new highs was coming.

As I wrote for members this week with FOMC – likely a breakout in indexes + a large move higher in GOLD/SILVER according to technicals. It showed us that after FOMC results Gold and Silver were up 5-6% and indexes exploded 1% higher to new all time highs and confirmed the view that new highs were coming.

At the current levels as we hit SPX 1730 I would not get overly optimisstic about marktes as the upside potential from here remains pretty limited imo.

As we broke above 1710 to new all time highs markets already started to pullback from SPX 1730 – was this an intermediate high or are we going to make one more higher high , to form a clear bearish divergence ? It is possible.

Do I believe we have made a bull market top ? No – not really , but I would expect a coming correction. Got a cycle friend looking at cycles telling me that we are very close to a bull market top from 2009 , but I believe still we have a little more left on this bull market before we enter a bear market.

However lets take 1 step at the time, so far bears controlling mkts from 1730 as we pulled back into weekend. Question is the 1700 level , if we hold there and bounce , we should see new all time highs yet again , probably 1740-1750 then and IF we break below 1700 and close below it , I expect that 1730 was a top and a large correction should be underway.

CONCLUSION: The conclusion is that you should be careful betting that markets will just shoot the the moon at current levels. We got still so many bearish divergences which has not yet fully played out on the last 5% mini correction past month. Watch SPX 1700 , if this level holds – we could rally to 1740-1750 before forming a major high in markets. Either way , after this I would expect a “large correction” more than the past 5% – we should see a -10% correction sometimes after this to reset charts. This coming week is STATISTICAL the most bearish week of the year , so bears might have some legs going on.


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