Wednesday April 18, 2012 5:00 PM CST
The lack of any follow through has us thinking our original A B C correction is in fact underway. The banks were the problem in 2008, and still are. Let's take a long term look.
The XLF has hit resistance where it has consistently failed before. One can make a triple top or sorta kinda head and shoulders here. Either way this looks very toppy.
Russell Smal Stock Index
The Russell has a double top that is already trending to the down side. Note this is a lower high than in 2011. This coincides with our idea that stocks are likely to top THIS YEAR. The only real question is whether the FED and TBTF banks can keep things up until the election.
So our conclusion is that our original A B C correction idea was the right one. Some readers have suggested we may not be even that lucky. They have suggested the top is in noting the poor performance of the banks. We are certainly not long stocks here having exited in early February. We do have a position in Central Fund, HDGE, and ouch SJT and HGT, the last being misses.
SPX Possible Wave Count
This is an update of our original idea expressed last week. Indeed we wondered how the market stayed up in price while the internals have collapsed since early February. If Wave A = C, a 60 point drop would mean 1330 or so.
Bottom Line - We expect lower not higher prices in the near term. We suggest new readers go back to April 6 and read our original thinking at that time. There is a small arrow at the very bottom of the overall page, hit that to go further back. These are tough markets, which have exhibited great volatility both up and down the last ten trading days.
Thanks to Steve Kaplan at True Contrarian for a mention on his site, we have had a nice spike in readership the last 24 hours, see Revolver Map at top right.
Thanks for reading The Market Perspective.