Market Overview

Still not seeing any extreme bearishness yet

(ACCESSWIRE via COMTEX News Network)--

by an publication

I have been referring to this time period to my members as the reverse ground hogs day with the bulls and bears. For the last 1 ½ years, every time the markets had some type of big drop, we would see EWI and many of other bearish bloggers stamping a P3 on their charts. Once 5 waves completed, everybody expected the wave 2 up and once it blew through the 78% retracement level, the count switched to a zig zag and new highs were made-the next time P3’s started popping up, it was a double zig zag and new highs were made-and then a triple zig zag and new highs were made. The bears were smoked, run over and beaten to a pulp (yours truly) The bears were pointing out bearish divergences, overbought conditions, sentiment readings and the economy as to why the markets are going to crumble, as they just continued to move higher and higher. It was like grounds hogs day for the bears (the movie) where the same pattern kept appearing and it was the same results-we got smoked. Lines in the sand were drawn-erased and redrawn again and again for almost a 1 ½ by the bears. (Yours truly) Now I believe the bulls are living the ground hogs day nightmare, and nobody has realized it yet. I see the bulls pointing out that the P/C ratio is to highs-NYMO is too low-sentiment is too bearish-we are oversold-we are seeing positive divergences- this is a zig zag down ( now a double zig zag) and we should make a run for 1280-1300- the fed won’t let this market down-the US is better off than the rest of the world and they won’t affect our growth. The line in the sand WAS the mistaken flash crash lows. Once they were taken out..the eraser came out and the February lows was the new line in the sand. Some indexes took them out and the new line in the sand became the spx 1020. Once that gets taken out, it will move to the 50% retracement-then 62% retracement and then 78% retracement with the final line in the sand the March 09 lows. The bears were trained to short rallies from 2008-2009 and never believed that the spx would get to where it did. The bulls have been trained to buy the dips. Are they on deck to get smoked-run over and beaten up and don’t even realize it? Will they buy the dips all the way down to the March lows? They will get some nice rallies to convince them the next leg up has started to the land of roses and rainbows-and when that finishes and we pull back, it will just be a wave 2 down and sit and watch the lows get taken out a few weeks later. It has all of the makings of something like that taking place. The biggest difference from this decline that ALL the others; The bears now have alternative counts already in place and are trading with their eyes WIDE open. That is a great thing to see if you are a bear. The bears are watching EVERYTHING that is going on-have a primary count, but an alternative count ready to be put in place if needed. In the past, we always had a primary count and were smoked by the wave 2’ up that turned into zig zags and new highs were made. The past declines had the retail bulls very skittish and they sold first and asked questions later. Now we are seeing the retail bulls sticking with bullish wave counts and expecting higher levels, even as the tape continues to fall-rallies are sold off and take place on low volume. The mom and pops have the hook line and sinker in their mouth, believing with 100% certainty that “the fed won’t let this market down”. We will see what takes place, but this is NOT retail selling from what I am seeing. This is the big boys running for the exits at once. Unfortunately, the imbalance of liquidity and spx 1220 price level that we just saw, may have that exit door the size of a mouse hole when they try and leave. When the spx was at 1120 and compared to the cash inflow into the markets from institutions-mutual funds-hedge funds and retail, the spx was 19% overpriced (from an interview with the ceo of trim tabs). Meaning the amount of cash that came into the markets from the March lows to December 09- the real cash value of the spx should have been 908. Where and how did the spx increase its value by 19% compared to actual cash flow? Very simple-they used the overnight futures markets to prop up the tape and cause gap up after gap up to get the spx to where it landed. It is very similar to a naked shorting situation, only reversed.

I am looking for some panic to set in before a tradable low is in place. I am also expecting the Rut and the QQQQ's to under perform the spx and Dow.

ETF’s we trade: Ultra S&P500 ProShares (NYSE: SSO) Ultra Dow30 ProShares (NYSE: DDM) Ultra QQQ ProShares (NYSE: QLD) PS UTLRSHRT QQQ (NYSE: QID) UltraShort S&P500 ProShares (NYSE: SDS) UltraShort Dow30 ProShares (NYSE: DXD) PowerShares QQQ Trust (NASDAQ: QQQQ) Direxion Daily Small Cp Bear 3X (NYSE: TZA) Direxion Daily Small Cp Bull 3X (NYSE: TNA)

For more of MarketsPath, sign up for a Free 15-Day Trial to Gary Dean's and Jerome "Mel" Hickerson's Trade Journal, where you receive technical analysis and trade alerts throughout the day for trading ProShares Ultra Index ETFs.
View Comments and Join the Discussion!
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at