I Called the Top
For the past couple of weeks, I have had my blog motto (at the top of the page) set to: “The S&P 500 Bear-Market Rally is Almost Over.” I hope that you were paying attention and didn’t get stung in today’s (and yesterday’s) sell-off.
Today I have changed the motto to: “The S&P 500 Bear-Market Rally is Over. Look out below!”
If the economy really were strengthening, we could expect the market to move sideways for awhile here before resuming its climb. But the economy is weakening, and the market is more likely to get very ugly, very quickly here.
The S&P 500 broke its intermediate trend-line on heavy volume today, and that will cause every technical trader on the planet to short any kind of strength going forward, me included.
May 21st, 2008 at 5:46 pm
Just started reading your post got it through stocktiger.com
Very helpfull. I have green in SKF also.
Thanks
May 21st, 2008 at 5:49 pm
Great Call
May 21st, 2008 at 6:42 pm
Hi Ellen,
Thanks, and I’m glad to hear that you’ve done well with SKF.
One thing I’ve noticed is that XLF seems to be a favorite place for money to rotate into when oil corrects. So, that’s something to keep an eye out for. It’s happened to me twice since I put on my SKF position, and I rode it out both times. It could happen again at any time, but if it does, I will ride it out again. The financials are leading this market down, and a temporary sector rotation can’t change the picture for long.
Matt
May 22nd, 2008 at 8:10 am
Hi Matt,
initial claims much better than expected. No market reaction. Last week stocks would have soared on these news. Now the bulls are still in the barn half asleep. You are right: the sucker’s rally is over.
May 22nd, 2008 at 8:39 am
It seems like the banks have poured the liquidity money they received from the Fed into commodities and commodity-exchanges abroad. This oil bubble might burst soon. Millions of gas stations around the world, not one of them is out of gas.
Secondly, how will the tax-rebate affect withholding taxes? Should be minimal?
May 22nd, 2008 at 11:57 pm
Hi Dressguard,
And with the drop in oil, there should have been a much stronger rally than the feeble 3.5 points that the S&P barely managed.
Matt
May 23rd, 2008 at 12:04 am
Hi Larry,
If the banks do as well with their investing in commodities as they did with mortgages, I won’t be surprised.
If people spend the money on labor-intensive things, then we will see a bump in withholding taxes from the rebate checks. If all of sudden, double the number of people show up at a store, the manager might have to call in some extra workers, pay them a bit extra, and withhold a bit extra. On the other hand, if the money is all spend at self-serve gas stations, then we might not see any increase in withholdings. But yes, this is a very good point and we will want to keep on eye on what the spending patterns turn out to be.
Matt
June 30th, 2008 at 10:40 pm
[...] 500 Bear-Market Rally is Over. Look out below!” I announced that change in a post titled: I Called the Top on May 21st. Yep, I knew it was the top only two days after the fact. How did I do that? Frankly, I [...]