I am switching back to BOT short signal on the sp500 right now in the afterhours or from the open tomorrow. The tape looks too weak and I am making the conclusion now that the 5 to 7 day super mega rally we had a couple weeks ago was a massive bear market rally.
I think that bear market rally was the beginning of a big unraveling and we are about to see all of it retraced to the downside which will be very bearish.
The two monthly hanging man candlesticks seem to be correctly forecasting the direction of the current market.
The MONTHLY time frame continues to look very bearish and from the monthly time frame chart of the sp500 and some other indices I can say with much less doubt now that we will enter the most destructive price action in SEPTEMBER or OCTOBER of this year 2011. That is how the monthly chart projects from my view. We should continue to see weak tape action leading into that time frame and it will continue to get weaker and weaker as time progresses towards that target time frame.
I would not be surprised to see 1180 or 1050 in the sp500 by October 2011 this year.
You have probably heard it said elsewhere that ‘tops take longer to form than bottoms’. And this time appears to be no exception. This top has been a process, not a one time event. It has the flavor of distribution and a transfer of shares. So soon I think we will see the eventual result of that which is a change in trend from up to down on more longer term basis.
The sp500 should break down through 1250 decisively and we should see some real fireworks to the downside going into October of this year.
The SMH (semi conductor ETF) and the XLF (financials ETF) look HORRIBLE and will suffer equal devastation going into September October 2011.