The longer term trend is down, the shorter term trend is
down up (sorry typo). We’re in a presumed bear flag within a confirmed bear market. As such I am trying hard not to swing against the primary trend, even though the short term trend is up. It is indeed painful holding the short position during the bear flagging.
The bear case:
- The death cross (50 MA crossing below 200 MA) has been confirmed for a few weeks.
- 100 MA has just crossed below 200 MA this week.
- The Gold/Copper ratio as a long term leading indicator is still at its lows with the 10 MA below the 20 MA.
- The 10 MA bullish percent index is turning down.
- The US economy is showing little sign of recovery. The sovereign debts situation in Europe is near a melt-down.
The bull case:
- The MACD on the daily chart barely moved on the last 2 pushes down (in September), indicating strong momentum to the up side.
- The SPY 125 has yet to be back-tested. See the 3rd rectangle target at the top of the page.
- The two lows in August can be technically viewed as the double bottom.
- The bull-bear sentiment nears the crossover, and the %bearish is at 52 week high. The last time it was at this level was September 2010. We knew it was the start of the last bull!
- The 30 minute SPY chart is in cup with handle pattern.
- The QE3 is implicit a la low yield in US Treasury through 2012.
- Europe and the emerging markets are in worst shape than the US.