THE DOT - if this turns orange or red be alert

Tuesday, June 15, 2010

SPX weekly update

Yesterdays reversal from the 200 MA was a good sign from a bears perspective allthough we can expect the same procedure again today. we have a special short term effect which is still valid today and yesterday which makes people upbeat about stocks but that will fade away starting tomorrow and be replaced by a negative pattern kicking in towards expiration on Friday which should bring markets under selling pressure again. The big negative highlight though is the lunar eclipse - on the 26th - on a Grand Cross pattern which should drag down markets to the recent lows and even make new lows thereafter. last time we had that pattern was during the 1931 decline and pulled markets substantially down. more on that the next days as we approach that pattern. For now I do not expect markets to make it through the 200 MA although at some point rather after the mid July low above 1000 I expect a rally up to 1150 area to make the right shoulder before the bigger crash will likely play out towards the 900 level.

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