BarroMetrics Views: The S&P 2009-06-01
The videos laid the foundation for the current price action and we are now at the crux.
Figure shows the cash as at Friday; and as at Friday’s close, the cash holds (There is currently about 5.5 point premium cash over September).
The points to note in Figure 1:
- There is a possible 1-day Horizontal Terminal (see Nature of Trends) in the offing. If the market breaks above 929, fails to accept above 940 (and preferably holds below 940) and then re-accepts below 923,the Horizontal Terminal will be triggered.
- Since the 1-day Horizontal Terminal suggests an 18-day line turn, the minimum target for this move would be 870 - but there is likely to be more downside than that (see below).
- The Vertical Lines represent the ratio time projections. The most likely turn will occur May 21 to June 23. My other time elements concur. Monday June 01 has some Greenblatt/Lucas numbers coinciding with the time dates. So, Monday is a possible high day.
Figure 2 shows the Normalized Volume chart. Notice that as the market has moved higher, volume has all but dried up. This does not augur well for the health of the down move. Figure 3 shows some advance/decline data I follow. From Figure 2 & 3, it’s clear that the US stock market is going up on a lack of selling not strong buying. The question is if we pop over 929, will that be enough to attract the sellers.
if we do attract the sellers, we have two scenarios open to us:
- The move up from 666 was the first leg up in a move back to the Primary Sell Zone 1576 to 1461 (basis cash).
- The move up from 666 was a bear market rally.
Let’s assume that scenario (1) is correct, what sort of correction can we expect. The stats suggest that a wave-2 correction in this context will retrace no less than 55% (799) and no more than 90% (693) with the average being 77% (727).
Note that if we do see a gap on Monday and given Friday’s price action, that is likely, we can apply the open-gap rule, 60 minute rule to enter a short position.
If the S&P shows strength on Monday, I will review the situation on Tuesday’s blog.
FIGURE 1 Time & Price
FIGURE 2 Normalized Volume
FIGURE 3 ADVANCE/DECLINE
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