Is the CAT giving us a clue

Interesting to see CAT falling down a bit after its inverse head and shoulders.  Of course it is only one DJIA stock and one stock does not a market make, but still, seems to very slightly start to support my 2007 H&S top theory versus the 2011 time frame.

This is really going to be interesting if we start to see a failure in the market going forward where we do not see the market being able to exceed the July 7, 2011 swing high. WOW is exactly the word I will be using many times if we see the market stall here and start to fall again and then show lots of weakness in the tape.

Everyone seems bulled up here that it is a foregone conclusion we are going to blast to new highs, it is all over the place..  Earnings are great, its summer time and the world generally seems to be working ok… But is there a black swan out there ?

cat20110722

If we are at a top, then this would maybe be one of the most deceptive tops I can ever remember.  Not that any market tops are not deceptive, most of them are and usually succeed very well at confusing the majority because of their slow formation and REPEATED rallies in between that get people bulled up.  The June 27, to July 7 mega fireworks rally was clearly a tempting sweet piece of candy.

Needless to say the next couple of weeks of market action will be very interesting.

Posted in SP500, Technical Analysis
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7 comments on “Is the CAT giving us a clue
  1. JR says:

    The thing I like about your blog is that it is always amusing.

  2. Geoff says:

    I agree with JR – – your blog is always amusing and almost always wrong.

    This particular posting smacks of the writing style you were using almost one year ago to hearld for your dear readers the coming apocalypse of the “cardinal climax”.

  3. Tom says:

    I think JR was actually giving me a friendly compliment…

    I thoroughly enjoyed it 🙂

  4. Neal says:

    Geoff: Check the 7/21 blog titled “Inverse H & S…” for my comments directed primarily to you.

  5. RMT says:

    Apparently (as of this writing) John boehner has withdrawn from debt talks. I have no doubt that the debt ceiling will be raised, but if it is not raised by the deadline, then we could have some sharp selling next week. Its a shame really; everyone knew about this for months if not years, yet we are down to the last week of the deadline on a debt ceiling that we all know will be raised sooner or later. There’s almost no choice but to raise it. If they don’t raise it, then with the current cash flows, we’d have to cut a significant portion of our budget immediately ( and by significant I’m talking about 40-50%) just to pay off bills. That really would be catastrophic if something like that were to happen for a significant amount of time and I have no doubt that we would fall back into another recession if a shock like that were to occur to the system. After a month or so, people will be rioting in the streets and our politicians will be forced to raise the debt ceiling.
    The SP 500 was up about 2% for the week and the dollar on the DXY was down about 2%. It will be interesting to see how the dollar does next week. If debt deal gets done, markets will prob rally and dollar will fall. Then we’ll have to asses where markets are at. But if there’s no deal next week, will investors sell the dollar? Also the HS on SPY is still in play and I would not be surprised to see a retest of the 1295 or 200 MA on SP 500 if debt deal doesn’t get passed.

  6. Tom says:

    RMT, I am considering issuing a major BOT Short Signal on Monday of next week depending on developments. The 2007 top similarity with the current time frame and the monthly bearish divergence pointing to a massive decline in October is still not invalid, it is still in play.

    It could become invalid with pivotal price action in the weeks ahead, but the 2007 2011 chart comparison is putting me in a possible frame of mind that we could be at a huge huge final top in this market with possibly the high of two days ago being the final price high for the rest of 2011.

    I have to cook up some more charts and slice and dice them and look into this further, but I feel that we are possibly at one of the most pivotal weeks in all of 2011 this week.

    As far as the debt deal circus, my sense is that something will get worked out as you indicate eventually.

    I wonder though if a repeat of 2008 would occur where the market rallied 400 points higher after the passing of some legislation, but that was after it had already declined 1000 points the previous day on a failed vote.

    The market is drifting around so casually right now. It will be very interesting to see if it actually does something with more momentum next week or continues to just drift with no conviction.

  7. Geoff says:

    Neal
    thxs for comment. perhaps you think that i have been following the advises of this blog. nothing could be further from the truth. the “signals” that this blog has published are almost perfect contrary indicators – – so reading the blog does have its advantages if you do exactly the opposite.

    shortly after starting to read this blog site, i realized that the blog writer apparently put a lot of stock in astrology, and 8.6 year cycle work of some convicted alleged ponzi schemer still serving time, and if that was not enough, this blog has even mentioned the mayan end of days!

    as stated above, by another reader, this blog is “amusing” and at least gets the gray cells thinking. BUT, as is often the case in this world, or crossing the street, it is best to look both ways before crossing.

    the shriller the headline on this blog site, i have found, so far with NO EXCEPTION, that the headline is dead wrong. but this blog writer is no different than many letter writers who are looking for a following. they hope to make the mother lode strike by having a daring, glaring headline that actually turns out to be true which may set them up for a decade of avid followers. so, maybe, this blogger will eventually hit the jackpot!

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