S&P - Sep 25, 2008

charts courtesy of stockcharts.com

We have seen the following chart in an earlier post. Let’s update it a bit.

So far, we are on track. The drop zone has held, and has provided the adventurous with an opportunity to test the long side. Patience that we advocated on the MACD paid off, and now we have a short term buy signal there. One downtrend line was broken, and now index is sitting above it, I like to see a pull back in VIX.

May I hazard a wave count now? Previous wave set was forced into termination by government and SEC intervention, and what had every technical indication of unfolding as a clean wave down, was aborted. Amazingly enough, it still can be counted as 5 waves. It is not as clean as I would like, but what is clean about these markets, anyway? I meant that literally.

There, of course, is the possibility of what is marked as Primary A to be a lesser degree wave, and a part of a monster wave down. But, as I have mentioned before, as long as the Sep 18 low holds, I will give it the benefit of the doubt. And that is in view of all the panic signs that we've noticed, some of which, I have already discussed.

Technically, it should be a low good enough for weeks if not months, but what do technicals, or fundamentals, mean in a heavily manipulated market? You be the judge of that!

To emphasize, there are very bearish wave possibilities here, and I am just giving this semi-bullish version the benefit of the doubt because of reasons I have already discussed.


I am by no means relaxed, nor complacent. This market can implode in a New York minute against a backdrop of heavy-handed intervention, lies, deceit, political posturing, bad loans, bankrupt banks, indebted USA, soaring TED spread, collapsing corporate bond market, should I go on?

So, the sky is falling, why not be bullish? That was part joking, part being contrarian. I am just giving it room to play here, the onus is on the bulls to show their worth. They have to prove that this rally was not another buy-the-rumor, sell-the-news shenanigan for which Wall Street is so famous.

If in doubt, I should remind myself that there is nothing wrong with cash, at least not yet.

One final note: some believe there are mysterious agents in the future markets that intervene, usually on the buy side to prop the market. Maybe they also believe that same agents can send the market down to force a political deal.