The Market Confirmed a Major Top Today

I was going to write a piece on why I think the market will move into a topping process in the July – August 2010 time frame and give some data to back it up.  But after today’s price action in the indices, combined with the downside volume, it appears that today’s price action has the market TELLING US that a very significant top has now been made.

There are a number of reasons why this current top could be very significant indeed.  Perhaps even as significant as the October 2007 top.

  • The reaction rally that we have seen since 2/5/2010 appears to be similar in character to the topping process that occurred during the August 2007 – October 2007 time frame.  A while back I did a post on how similar the current market structure looked compared to that time period.
  • Sentiment readings as of a few days ago have reached extreme levels of bullishness
  • There was a very important ‘Pesavento Index Day’ 2 days ago which is an astro turn signal date known to be very precise.  They don’t always work, but when they do they can have great meaning.  The magnitude of the one 2 days ago is of same magnitude as the one that occurred on March 6, 2009, the market low.
  • The gold price shot higher today with excellent volume as well and initiated a powerful buy signal based on my previous post.  And perhaps more significantly, gold shot higher in the face of a surging US Dollar.  When this happens it is a sign that something else is not right and warns of big trouble ahead.
  • The NYSE composite index, a very broadly diversified index is very close to issuing a very negative 2B Technical Sell signal
  • There are some EXTREMELY powerful and EXTREMELY negative clusters of astro aspects that are coming online in the JULY 2010, AUGUST 2010 time frame.  Originally I thought that the market would not begin to break down until that July August 2010 time frame and this could be identified by a weekly MACD bearish cross.  But now I have to conclude that this July – August 2010 time frame will serve as a continuation point of the decline that is beginning now.  In fact, it could lead to a huge crash going into September, or the July August period could contain the crash as well.  That is the best I can interpret that time frame now, but will have to see how the market looks near the time for better analysis.
  • The end of 2011 scenario.  In the bigger picture you should be thinking of how the broad market indices will behave going into end of 2011.  Based on the overall market structure since October 2007, it would not be unreasonable to expect the market to plunge from the current time frame into end of 2011.  End of 2011 is also a very important Marty Armstrong 8.6 year cycle date that could mark a more permanent low.
  • The fact that the market has turned right on the recent negative Pesavento Astro date has me very concerned about the intermediate to longer term future of this market.  And I agree with Larry, if the banks start to crumble again, there is NO WAY the public will stand for another huge round of tax funded bailouts again.  Not with the experience of having gone through it in 2008.  So you can see how severe another round of bank failures could be.  Perhaps thousands will fail and the entire monetary system will be at risk going into 2012.

So What Now ?

Pretty much all of the inverse bear ETFS are ideal right now in my opinion.  They have been beaten down so hard and volatility has declined to such a low point that they are about as ripe as anyone could ever hope for at this point.

I went long the TZA Direxion Daily Small Cp Bear 3X Shs today and will add to new longs on the TZA on any bounces in the days ahead.  I think the run coming in the TZA could possibly be a much longer run than many are expecting.  The market has ‘trained us’ to believe that the TZA only does 10 to 15 day runs maximum and then dies.  This time I think it will build higher and higher for quite some time.

The TNA (Direxion Daily Small Cp Bull 3X Shs) from the March 6, 2009 low went from 10 dollars all the way up to 70 dollars (in April 2010).  

So I would be open to the idea that the TZA will build a strong more sustainable run higher this time.  That’s how potentially significant the recent low is in the TZA in my opinion.

The next best thing to the inverse ETFS is Gold! The GLD and DGP moved up strongly today and I expect them to push higher as the market crumbles.

Other than that, there will probably be plenty of short opportunities on individual stocks. 

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