Sunday, March 8, 2009

Now that the Market showed it could rally, are you ready to have Your Hopes CRusHED AGAIN?

IT COULD HAPPEN. ! ! ! Who would be surprised by this ? Certainly NOT ME.

What are OUR hopes, our fears ? Our hopes are that the market will turn upward in a spring surge. Our Fears are that we will will be plunged into the Abyss of the UNKNOWN, as we already have been.

So what is being feared is fear itself, to paraphrase FDR. If you look at the slaughter of the PM's Juniors, the decimation of the general market, the plague visited upon the Small Caps, and the
general screwing of the public by the Powers That Be, I say, what is really to FEAR since we
all have BEEN THERE, DONE THAT ? I got the Tee Shirt, and the video. The TEE Shirt I since gave to the Salvation Army and the Video I burnt. If you "Been There, Done That", then you have a guide ! ! !

Lets examine the options, as outlined by several Pundits, whom have been good, not uncanny, but often right.

1/ The market Rallies hard, in electronic speed, to 7500 [ DJIA ] and crashes back to 5000 or so, from whence a Super Rally, ala, "1931", ensues.

2/ The market Crashes hard, in electronic speed to 5000 ala 1932, and stays there [ " L " shaped Depression Coming soon to a town near you ].

3/ Market engages a "Punch - Thru" rally that pierces Upside Resistance @7500 and runs to
10,000, again from then whence no one has a clue what will follow.

NOW that we have outlined those options [ this is NOT an exhaustive list of the options ],
Let us EXAMINE how each of these Options would satisfy some of the 'likely' technical momentum criteria.

A/ Options #1 Could easily reduce the OVERSOLD Compression Pressures in the Breadth Arena, such that these measures could enter the OVERBOUGHT Ranges and render such an advance as Option #1 outlines, seriously Vulnerable to a" INSTANT Crash to 5K" Scenario.
Such an happening, IMO> would likely result in a then, hard and sustainable rally to higher levels. I guessimate the possibility of this happening at 25% for the next 2-3 days.

B/ Option #2, Market Crashes to 5000 directly from here, and stays there, does not Pass Go, nor collect $200.
This would complete SUPER supercede all data for this modern era and set new records for oversold levels portending the end of the world as we know it. I assess the likelihood of this, at
Less than 10% for the next 2-3 days.

C/ Option #3, Direct "PUNCH - THRU" RAlly vaults all resistance and runs right to 10K from here. I assess the likliehood of this as Less than 10% for the next 2-3 days.

My particular conclusion is that we will experience some conclusive action, and if I were a bookie, I'd suggest that we experience enuf Rally to relieve the HISTORICALLY Extreme OVERSOLD Compression in the Breadth Measures, as as they approach their Exhaustion Levels, either a Crash or Drift down to Levels MARGINALLY lower than this LEVEL, wherefrom a more sustainable Rally will result.

WHY ? I Seldom speak of the WHY's because I DONT KNOW THEM. BUT if I had to again guess, I'd suggest that we are awash in liquidity, that the RE-Flation Stimulus Measures are so HISTORICALLY Extreme, that as ANY minor amount of this slops over in the Equity Markets, it will be sufficient to prime the pump to then jump start a rally, after the operative emotion, FEAR, has been softened a bit more.
To its further support, values here are approaching panic levels [ yields of going concerns demonstrate such, IMO ! ], and such Compression in Values as caused by said panic, will need be
lessened in order to ripen the condition for further declines, so Rally will become the temporary path of Least Resistance.

DG

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