Thursday March 17 2011
Our call for investing in TLT at recent low prices while exiting stocks at recent high prices was the right call, to say the least. Now TLT should be exhibiting the opposite pattern of stocks, and it is. Here is an hourly chart of TLT, a fund of long term government bonds. As I have said Elliott Wave counts are never completely clear unti lit is all over. But it appears that TLT completed a third wave up yesterday. As I write in pre market opening Thursday Marcy 17, 2011, stocks are poised to bounce back. That indicates both TLT and SPX should be in their fourth corrective waves today. My suggested wave count is born out by the MACD at bottom and RSI at top rising and falling in the same pattern.
Sure enough the SPX is a virtual mirror image of the bond market, which has proven to be the ONLY safe harbor versus stocks, gold, silver, oil, etc. Truly risk assets are all one market.
Note Mort Zuckerman’s article I today’s WSJ page A19 on the anemic recovery, next to the article that TARP did little or nothing.
This means the stock market should recover today and tomorrow before a new fifth wave low likely due by the end of March. One could add TLT purchases on a pullback today and tomorrow, things are not likely to get better for stocks any time soon.
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