Are the markets topping soon

Newsweek released a publication stating the recession is over. Pundits are talking about a new bull market and GS gave a target of SPX1000 as well as upgrading GE yesterday. GE shares rose, was up 9% intraday.

On the contrary, I have my doubts. Filtering out all the noise from CNBC, newspapers and TV shows, and plainly looking at charts and sentiment.

As the market retrace approximately 50% (target for the end of this bear rally around SPX 1121), caution is warranted at this juncture. Looking at the weekly charts, the SPX is tracing out a perfect ABC from March lows. We should be in major C wave of Primary B now, once this C wave is over, the entire ABC (Primary B) should end as well, marking the top. At SPX 997, negative divergences are starting to appear on all timeframes. There are 2 probabilites here.

1. The 5 impulse waves off the July 869 low is Intermediate wave A of Major wave C of Primary B. After a zigzag intermediate wave B correction, Intermediate wave C will bring the indexes to new highs, targetting SPX1121.

2. A truncated Intermediate wave A of Major wave C of Primary wave B ends the bear rally.

In both situations, another downtrend will occur to end this bear market (Primary A 1576-666, Primary B 666-? (target 1121), Primary C 1121 - ?)

We are now 5 months into this correction. If comparing this bear to a similar 1929-1932 supercycle degree bear which also retraces approximately 50% of its A wave in 5 months duration. And thereafter, it finished the bear in a devasting C wave.

Another indicator of a top will be public sentiment. Bullishness should akin to that of Oct 07 top, with media declaring a new recovery/bottom etc. Watch GS as well. Remember last year when GS announced a target of US$150-200/barrel oil ?? Soon after, oil hits US$140 and it fell thereafter.

VIX which represents volatility is also showing positive divergence. Once its MACD turns positive and it breaks out of its wedge, volatile times should return again.

Also of particular concern are the oil and precious metal markets. They bottomed in Oct/November, months before US indexes bottomed in March. They have since marked the top in June 09, with oil forming a double top. Even with the SPX and DOW making new highs recently, oil is not conforming. This is intermarket bearish divergence.

For Asia markets, they made their temporary bottom in Nov 2008. The Shanghai Composite Index has met its major resistance and dropped 5% 2 days ago. Though it seems like a change of trend, we need to monitor for a couple of days more to confirm if thats indeed the top. There seems to be a shift in the balance of power, or market leader. Asia and Commodities markets bottomed first before US or Europe. And if they now mark the top first, this would probably mean that Asia will lead the recovery first after the final bottom is made.

By then, fear will be everywhere in the global markets and there will be no bulls around. Thats the time to cast your fears aside, step in and BUY. I believe after the final bottom is made, US markets will be quite stagnant for awhile, hence a L shape recovery. Asia could be different. This transfer of the balance of economic power could perhaps be the major theme in this bear market.
With all these reasons, its now perhaps time to load puts or pile up on shorts and exit longs as we prepare ourselves for the next Wave C. The big bad one.

Good articles for reading

Here are some good articles to spend your weekend away.

1. Martin Armstrong July 10 article on "The Goldman Sachs Conspiracy - The Real Dark Pool"


2. Martin Armstrong article "It's Just Time".
This articles talks about his Economic Confidence Model and PI cycles. Included are also topics on Kondratieff Wave, Gann's Fibonacci and the Mayan mystery.


3. Kondratieff Long Waves
The Long Waves follow a cycle of 60 years. And its broken up into 4 phases from Spring to Winter, each lasting approximately 20 years (plus-minus). Many who studied the K-Waves believed we are currently in the Winter-K wave phase. A K-wave winter is characterized by a three year collapse, followed by a 15 year deflationary work out period. Quite coincidently, the Long Depression featured in an earlier post on KV, was a good example of a K-wave winter, as was the Great Depression of the 1930's. This period also seems to coincide with the attributes of Pluto in Capricon (2008-2023).

The original translated 1926 paper.


4. Elliot Waves Theory by R.N. Elliot
This is the core of my trading techniques. I used both EW and technical analysis in my evaluation of stock market trends. Using this theory, bull markets follows 5 waves, and bear markets 3 corrective waves. The degree of each wave determines the depth of correction and whether there will be sub-waves within each major wave. We have supercycle, cyclical, primary, major, minor, minute waves (from the largest degree to smallest). E Waves do not forecast or have the ability to pinpoint exact tops or bottoms, rather its more into knowing at which the trend of the current market and highlight probabilities of certain pivots and turning points. Together with technical analysis and fibonacci guidelines, it enhances a trader's ability to forecast with greater accuracy. E waves can be confusing, because people using them have different perspectives on the markets. If one believes we are in a supercycle degree correction right now, the targets for the bottom of the stock market will differ from someone who thinks we are merely going through a cyclical correction. The theory is never wrong, however the ones who use them are, hence counts are frequently altered. Even Bob Pretcher, the founder of Elliot Wave International were years early in his famous bear call and missed out the boom years from 2003-2007.

He marked year 2000 as the peak of stock markets. Following the NASDAQ bubble and dotcom crash, the US markets underwent a bear correction from 2000-2002. The bull years from 2003-2007 were not confirmed by DOW Transports. According to Dow Theory, non-confirmation is a warning signal. And if we view the SPX/DOW in real terms, he was right on. The stock markets were firing up in these years and so was silent inflation. If we measure the SPX or DOW in terms of gold, real growth peaked in 2000. The years thereafter were fuelled by low interest rates and inflationary growth.

Cycles

I am a believer in Cycles. I believed things are not created equal and though we strived to be so, it will never meant to be, at least not within our current age or eon. Perhaps, one day, human consciousness will move towards a higher state of being, but that era should be sometime away in the future. Throughout the vast span of time, matter is born, created, peaked, decline, die and the cycle continues. From the beat of our hearts, the sunrise and sunset, the moon cycle, the galactic cycles and whether its caused by the big bang, God's creation or karmic forces, human evolution has never ceased to stagnant or stop its ever changing path.

Life is about maintaining equilibrium. Finding peace and harmony from within. I had been searching for the answers as to why there is inequality. I feel sad whenever I see the underpriviledged. I always believe that one day, life will be equally good for everyone, even if that one day may be far far away. However, now that I realised, life was never meant to be a one-liner. I no longer feel the anger inside me. It is a sense of quiet calm and peacefulness after realising the truth. This is a sad truth, but on a positive note, inequality spurts growth and changes.

Opposing the natural path may bring more pain and unwarranted unhappiness. Communism, perhaps, has ended more lives, separated more families than what it initially stand for, equality.

Ancient civilisations had come and gone, Atlantis, Mayans, ....
Empires come and gone....Roman, Egyptians...
Countries come and gone....

From the past till present, history always seemed to repeat itself. In the cycle of human evolution, are we currently in the fifth root race of Aryans ?

There have been lotsa doomsday topics, which I probably take it with a pinch of salt. Not saying its not true, it will come true one day. But I guess that day is still far away. If you are a Christian or Buddhist, you'll probably be aware of the second coming of Christ or the next Buddha, Maitreya, who will be descending to Earth some 50,000 years later. So, we still have time haha.

Disclaimer : I am a free thinker and I do not specifically promote any religion in my blog. These are merely my findings and thoughts which I'll drop a line or two but will not go into details.

Perhaps one "end of the world" talk which is coming close is the 21 Dec 2012. This is the date where it marks the end of the Mayan's long count calendar and signifies the end of their times. They are skilled astronomers, and in no way had they particularly mentioned that this date is the end of the world. These are rumours that are unfounded. However, I do agree that this day probably heralds the start of a shift in human consciousness towards a higher level as we moved from the Age of Pisces to the Age of Aquarius. Hence, the end of their long count calendar marks a beginning of another era.

21 Dec 2012 is a special day, because it is also the day of galactic alignment due to the precession of the equinoxes. A rare occurence every 25,800 years which coincidentally, is end of a galactic year, also known as "cosmic year".

Additionally, in financial astrology, the period of 2008-2015 has been predicted to be tough and challenging in the global markets. It will climax in the year 2012 when the planets square one another in the Cardinal Climax. A good read from one of the renowned financial astrologers. Merimman Market Analyst.

According to Nasa experts, they are expecting a peak in solar activity in 2012. A good time to watch the Northern Lights heeheheh. I think there is a movie coming out in November that is based on this upcoming solar storm.

I'll share some information on economic cycles, particularly, Martin Armstrong and his PI cycle in my next post.

The September Dream - Choosing the right cruise ship

Hoo Ra ! I have not been blogging for sometime coz my mind is focusing on the september dream ..yeah ... its finally coming !

This is quite a last minute decision as I did not initially plan to go anywhere for the later half of this year. However, just suddenly wanted to travel so much and picked up my long abandoned plan to go Alaska. I loved Alaska, the pristine wilderness, the whales, glaciers, seals, otters, brown bears, i simply adore them. I dreamed of going there for honeymoon, but Jon is not a scenery lover and prefers artifacts, culture and buildings. So we went to Europe instead. I have always wanted to see the northern lights too, they are just so amazing.

Finally after nagging in his ears for 2 years, Jon agreed to go hahah. This trip may also be my last long haul one, for at least the next 10 years. No, I am not pregnant lol. But its probably time for us to start serious family planning from next year onwards. With a kid, I guess chances of such trips will be far and few. So I better grab this chance and chiong. . so in a tight timeline of 2 months, I have to start crash planning.

The first is to source for the right cruise ship. There are a couple of reputable ones such as NCL, Royal Caribbean, Celebrity, Princess etc. Each have their own pros, cons and caters to different markets. The ones highlighted below are some of the common ships which sail to Alaska and Caribbean.

NCL, Royal Caribbeam, Carnival - these are "fun ships" and are usually huge in size. Around 2000 to 3000 passengers onboard. They have more amenites and caters to families, kids and young people.

Holland America, Princess, Celebrity - these are the more premium lines. They have more exquisite and award winning menus. Services are usually much better. For Holland America, most ships tend to be smaller in size, allowing them to cross passages which are not available to bigger ships. The passenger size is also smaller, allowing for a better space ratio, without everyone squeezing on deck just to see glacier calving.

Cruise West, Regent Seven Seas, SilverSea, Azmara - these are luxury cruise ships and are also smaller in size. These are fantastic ships to be on, if you have the budget. They are all inclusive ships, which means gratituties, shore excursions, alcoholic beverages are included. There is a promotion going on right now by Regent Seven Seas. They offer 1 for 1 cruise fare, free and unlimited shore excursions for 2010 vogages.

Many cruise lines are going to reduce their sailings to Alaska in 2010, hence prices could probably incease. So, another good excuse for me to go this year haha.

NCL is a good choice for people who prefer freestyle cruising, ie, no restrictions to dress code, no fixed dining hours. I loved it too, but was quite put off by reviews mentioning that there are always long queues on every restaurant during dining hours. One thing I like about NCL, its famous Chocolate Buffet ! Yummy !

After much consideration, we decided to go for Holland America (HAL). HAL cruisers tend to be more "mature", meaning older in age. HAL has a long history of traditional cruising, yet is also modernly equipped to keep up with the times. Frankly speaking, I prefer a more mature crowd. Kinda make me irritated if I have to see kids shouting and chasing each other around the decks. Its also smaller in size, which I prefer as well. I am not into entertainment, so no night parties is fine with me. Food and service are excellent. And also, one important factor, is HAL's staterooms. After comparison, they have bigger staterooms than most other ships, making it more spacious and cosy. They also take good consideration of beddings and duvets. If not wrong, their beds are Sealy's.

All food are included in the cruise fare, no matter which cruise line you take. Hence everything that you order in the restaurants are free, except specific specialty restaurants. For drinks, only tea, coffee, plain water are foc. Alcoholic drinks and juices are payable. But these will be included in the luxury ships.

There are usually 2 formal nights for a 7 day cruise. Gentlemen are to be decked out in dark suits with tie or tuxedos. For ladies, it will be evening gowns. Most cruise ships observe these dress code. It is a good experience and it can be fun. But we have decided to skip the formal nights and dine in Lido restaurant during those 2 nights. I do not mind bringing an extra pair of heels or gown if I am just going to Alaska. Its just troublesome having to bring these for 2 nights when we are heading to Rockies and Northern Canada after the cruise. Hence, we'll dine in the Main Dining Room on normal nights, and Lido on formal ones.

More on the Rockies later, to be continued.....