March 2009 rally is over!Bear market now continues from 2007.
Last week daily $TRIN measured a complacency level among investors not hit in the 20 years I went back. That's right, complacency was higher last week than the April 2010 top, and at the all time high in Oct 2007. Bulls are absolutely foolish to place their complete faith in the FED with no other fundamentals or technicals to support a bullish stance.
I have full confidence in my model, and since I started using it in early July, it has called all the major moves of this mkt correctly ever since. This model is based on historical trading patterns that have already occurred, and shows me the shape of the next large move coming in the mkt. It is a big picture model so it shows me the shape of the larger moves and bounces, and the timing within a few days, but it is not precise in terms of exact top and bottom price targets, nor exact short term movements. I rely on other technicals to determine the short term movements.
I was early in picking up my positions in FAZ. Partly this is because my model shows that the next large move is a crash. Better early than late when we are looking at an imminent crash. I'm currently offside but I expect to catch up very quickly, and I'm pleased to be well positioned for the crash.
My model shows 3 tops and they are all in place now. The third top was Dec 7th S&P 1235. After that my model showed one final small lower high about 4-6 days after the third top. S&P did selloff after the 7th and then hit a slight higher high 1240 on Friday - 4 days after the third peak. The Dow did hit a lower high.
This small lower high was the very last event to happen per my model before the big crash. At first it may feel more like a pullback than a crash, but things will quickly accelerate from there.
Initially I don't expect the mkt to bounce much on the way down at all. It's a steady freefall. I'll be fine tuning targets in the days to come, but for now I'm looking for a fast move over $20 for FAZ with only minor pullbacks. From $20 to over $30, I think the move up will be choppier. There may be the odd trade, but the overall strategy is simple - buy and hold.
I've seen enough to know beyond any doubt what is coming next.
SC