US Equity markets – technical view
I was bullish on this market in early March as equities where at most oversold conditions in 25 years, coupled with major divergence signal (MACD). That said, the recent rally, which was the biggest short term % move since the late 1930′s, is at extreme overbought, using weekly charts, hitting major multi year (25) resistance of 930. At this point I feel there is more risk than reward. I will go long again if S&P will close above 950, but will get rid of more longs/add shorts if S&P close below 870. Long term chart shows major “bear in the crossings” formation that could end when the S&P will reach 566 or Lower (=about 4800 on the DOW). Fundamentals of many companies/economy is still poor, there are no jobs, and recent secondary offerings will add dilutions to earnings. In my view, S&P will need to close above 980 to start a new bull run. As of now, I view the recent rally as a bear market rally . Additionally, many small cap stocks went up over 150% in just 9 weeks – a bear market characteristic indicating that a potential big down move is a head of us. See 25 year monthly chart below.
General, Strategy/Allocation | izco | 
May 18, 2009 10:07 am | 
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