Maybe the panic isn't over yet

Hi there, and welcome back to RI's S&P 500 blog.



The previously reported breach of the upper end of the 'panic' bear chanel that was recently reported may have been a little haste. New confusion with regard to what are now being called 'legacy' assets by the big banks and an anticipation of poor earnings, have brought the recent rally into question. It seems ironic when one looks at the chart above and sees that the recent optimism hasn't even broken the most recently trading sell signal, go figure.

Considering too the upcoming cliche.....'sell in May and walk away', one shouldn't be too surprised if we indeed do have to take a pause here. Consider too the January Barometer and one also is left with the feeling that the market may have to move to the downside in the not too distant future. Lets hope I am wrong and we do indeed have a further upleg to go as we head into May...


As has been the case for some time, investors still have no reason to be invested in the S&P 500 (and US stocks in general). Weekly Traders should be short the US market from the indicated points and Daily traders should be very selectively long. While I do personally remain long a number of issues as we head into the anticipated seasonal peak in May (mostly in Venture Cap issues related to the metals markets), make no mistake, I plan to liquidate these short term trades soon, especially if I start seeing M tops...


That's all for this week,
Brian Beamish FCSI
the_rational_investor@yahoo.com
the-rational-investor.com

Panic is subsiding but no buy yet

Hi there, and welcome back to RI's S&P 500 blog.



Here is the cover commentary from this quarter's RI newsletter:

"Hello again from the Rational Investor. The first quarter of 2009 is now behind us and it is time to look forward into the spring. As is often the case, the markets are enjoying a seasonal bounce off of the lows made last fall. This time around, we seem to be ‘climbing the wall of worry’ regarding the economy and the duration of the current recession. Ironically, it is at the time when the talking-heads are most pessimistic one ought to be interested in the market. And only when they turn bullish should we consider exiting. How long this current rally can last is anyone’s guess but considering the bearish economic backdrop, the horrible January Barometer reading, and a market that has now relieved the oversold condition it was in a few months ago, a seasonal top may materialize sooner rather than later. Regardless, the market is moving higher so as one pier use to tell me, “make hay while the sun’s shining my boy”…"
(for your subscription to the rational Investor please visit the web site at http://www.the-rational-investor.com)

I think this sums up the market well. As investor optimism gowns into the typical seasonal peak one ought to look for a serious test of the current stop point somewhere near the 95.00 area on the SPY. Once the seasonal top is in I would expect the lows of the winter to be tested once again. It would only be at the point where the market tests that low (and it is not breached) and the reverses and turns back up through whatever high we register over the coming weeks to truly believe the market (and the economy) has turned the proverbial corner.


Considering the January Barometer's reading (go to the web site for that article) traders are not expecting this market to bottom just yet. Until this 'W' pattern does come in, I will temper my enthusiasm. Having said that, as the above commentary says...there are few periods of the year when the bullish sentiment pushes the market higher. We are in that kind of period now. For those bullish traders out there -enjoy it while it lasts. Once the seasonal window closes (I am using the June deadline for the conversion from analogue to digital TV service as my catalyst) I shall once again look back to the downside as we head into both the summer doldrums and then the fall.

That's all for this week,
Brian Beamish FCSI
the_rational_investor@yahoo.com
the-rational-investor.com

A Bounce In A Bear

Hi there, and welcome back to RI's S&P 500 blog.



The definition of a bear market is one that makes lower highs and lower lows and one that has moved more than 20% lower from its peak. As the chart above clearly demonstraights, we are now down more than 50% from its peak of more than one year ago and we continually make lower highs and lower lows. In a simple sentence - this is a bear market and will be until the market can establish a pattern of higher highs and higher lows and one that stops going down!

Having said that, we here at the RI, we have been looking for an ultimate move lower into the high 50's on the SPY. This target was established when the market confirmed the bear-flag-pole formation - refer to blog from March 10th - 'To give us an idea of a possible downside target one only need to look at the bearish flag-pole formation. (where the market peaked last Aug. near 128 - then fell dramatically down to a low near 82 in Sept. - then rallied back up to 105) . A break of 82 (which happened in Nov.) suggests prices need to fall down to the 59 level.'

What does this mean, traders ought to be short on a break of the recent lows (at or near 73.74) with stops just above the recent peaks (at or near 95.00). Investors have no business even looking at the US stock market for now. Current downside targets suggest the 59 area on SPY should be tested in the coming months.

That's all for this week,

Brian Beamish FCSI

the_rational_investor@yahoo.com

the-rational-investor.com

Lower highs and lower lows defines a bear market

Hi there, and welcome back to RI's S&P 500 blog.



The bear grinds on and on....

Looking at the above chart one can't help but feel a little depressed. We are now down 50% from the peaks amid 30 year highs in unemployment and a frozen banking system.

As a leading indicator, the push lower (and a break of the important fall low at 73.74) suggests we are not out of the woods yet. And the January Barometer (please visit website at http://www.the-rational-investor.com for your copy of this handy report) suggests there is further price deterioration ahead. Ugh!

Again, referring to the chart above, we are now comfortably within a steep downward pointing channel (deep red lines). This is bearish and will remain so until we start seeing higher highs and higher lows. As well, the moving averages are very comfortably bearish (13EMA < 30 SMA) also suggesting we will remain bearish for some time to come.

Should a rally come (very remote at this time!), my ultimate upside target for the present will be the gap (gaps don't like to be left open - especially on weekly charts) between $105 to $110. This would represent a move back to 10,000 on the Dow and a big psychological target going forward too.

What does this mean, traders ought to be short on a break of the recent lows (at or near 73.74) with stops just above the recent peaks (at or near 95.00). Investors have no business even looking at the US stock market for now. Current downside targets suggest the 59 area on SPY should be tested in the coming months.

That's all for this week,

Brian Beamish FCSI

the_rational_investor@yahoo.com

the-rational-investor.com

The Painful Road Lower

Hi there, and welcome back to RI's S&P 500 blog.



The important 73.74 has been broken on the SPY suggesting there is further downside price pressure in our future (ugh!).

As stated previously, weekly signals are still very much bearish so there is no reason for an 'investor' to be even looking at the stock market.

Traders should indeed be short from these levels with your associated stop just above the recent highs at or above 94.55...

Down side trading targets: The recent failure of the market at 73.74 suggests lower prices going forward. To give us an idea of a possible downside target one only need to look at the bearish flag-pole formation. (where the market peaked last Aug. near 128 - then fell dramatically down to a low near 82 in Sept. - then rallied back up to 105) . A break of 82 (which happened in Nov.) suggests prices need to fall down to the 59 level

That's all for this week,

Brian Beamish FCSI

the_rational_investor@yahoo.com

the-rational-investor.com

And The Bear Grinds On

Hi there, and welcome back to RI's S&P 500 blog.
(The is a re-post of the missing blog from Feb 25th, 2009)



The recent trading range is being tested to the downside. Among further talk of bank failures in Europe and North America, the selling on Wall Street continues.

Because this a re-post and not the original post (lost somewhere) I will keep comments to a minimum.

Traders should look to go short on a move in earnest through the fall lows at 73.74 on SPY. Should that trade occur, place you stops just above the high of the range at or just above 94.95.

Since the 13EMA is well below the 30SMA, investors shouldn't even look at the market. We are very much in a bear market with lower price expectations for the future.


That's all for this re-post and lets hope next week's blog isn't lost,

Brian Beamish FCSI

the_rational_investor@yahoo.com

the-rational-investor.com

Here comes another Big Test

Hi there, and welcome back to RI's S&P 500 blog.



One might say the honeymoon is now officially over!

After a month of love over the new US President partisan politics have once again taken over Washington. As a result, we have now come to the first big test of the new Obama administration.

On concerns about over spending (of all thing!) the recently proposed 'stimulus' package has now come in doubt. As the current bill has been delayed in the US Senate, equity prices (and specifically bank stocks) have fallen. Should the market believe the package will fail to meet its' needs prices will break support (currently near $80) and a new sell signal will be established for the US equity markets.

The true irony of this situation is the fact that the now 'fiscally conservative' Republican party are the same politicians that saw the total US debt more than double over the course of the Jr. Bush years. Now the remaining Republicans in the US Congress have abandoned the new President - suggesting that his proposals are nothing more than waist-full spending, how pathetic! Remember too, not a single Confederate state voted for Obama last Novemeber, who say's race isn't an issue any more......

I'll get off the soap box now.

Summary: Short term traders may look to play a break of the recent trading range (as noted on the chart above). Investers have no business even looking at the stock market now.

That's all for this week,

Brian Beamish FCSI

the_rational_investor@yahoo.com

the-rational-investor.com