S&P 500 - March 18, 2009

charts courtesy of stockcharts.com

Was that the smell bear meat roasting in the forest?

On March 16, I wrote

The weight of technical evidence is strongly on the bullish side at this time.

I also wrote

If index does not do a meaningful retracement soon, I would be really concerned and wary of the bears regardless of how insanely they growl. To put it bluntly, If we have finished wave 4 (or any corrective wave), and are now on wave 5 down (or any impulsive wave down), I will want to see a quick drop—dilly dally sideways is not good enough for me, and I will stand aside and observe

I guess I was right not to give a damn what the bears thought they were entitled to. I certainly was wrong selling my long positions too early and going to the side lines. But side line is better than being roasted alive. Take a trip down the perma bear blogs, you will sense the despair.

Oh, well!

Let’s get something straight: Mr. Feddie Chairee said that he would print and print and print and print. Will that printing succeed or not is a different matter. He will print. Well, not really printing (it is not Zimbabwe yet), but he will try to monetize the hell out of every bit of garbage out there, including the Treasuries. Can he overcome the forces of deflation? Who knows? Even he doesn’t know, or he wouldn’t have been that desperate.

Now, it’s just a question of what the bond market would do. Very interesting times we live in.

Anyways, market was not in a mood to take a chance on what a band of fools may or may not be able to do, and Gold reversed ever so vehemently. You can’t make this stuff up, interesting times!

I guess I can shelf the possibility of this rally being a wave 4 of some sorts. It is technically possible, but it would be a hell of reversal of fortunes to make it so.

We still do not have a confirmed mid-term uptrend. What we have is the price action since the 666 low, and the strength of that action has so far muzzled the bears very effectively. S&P has done 140 point without any meaningful pause.

Look at the Stochastics! Straight from below 20 to above 80. We have not had anything like that on this chart. Also notice where the price is. Hitting against the top of the channel that I said we could watch instead of bubble-channel on TV. That was one reason I shorted the Fed spike.

Index is overbought whatever that might mean these days.

Short term breadth oscillator is also overbought. That’s another reason I shorted the Fed spike.

It is quite possible that the Fed spike was genuine buying by real money by billions of people like you and me. It is also possible that it was a masterful squeezing, or rather screwing of some of the remaining bears. We have a history of dump the news, this is the mother of all expiration weeks, and all sorts of crooked games are being played. That’s another reason I shorted the FED spike.

Still, it may be different this time, and index may continue on its V-rise all the way to new highs (doubtful, but maybe Feddie Chairee doubles the number of his printing machines over night). That’s the reason I bought puts and said that I was looking at it as a gamble – ready to lose the position.

Well, soon after the spike, my position was in green, and I reduced it a bit.

Gambling aside, I need to see how this pulls back before taking a side.

I cannot repeat this enough times: The weight of technical evidence is on the bullish side. It does not mean the bear market is over, it does not mean that the lows will not be retested. It simply means that the market has been strong and it is up to the bears to prove their worth.

This is a 15-minute chart with some key levels if the index decides to pullback

I truly hope that each and every one of you who read my posts were long all the way into today, if so, take a moment and congratulate yourself. You are light years ahead of so many self-appointed gurus and experts out there

If you were not long, I really hope that my doubts and cautiousness was of some help keeping you away from being heavily short, if so, I will be very proud of myself

The quadruple witching week is not over yet!