Friday, March 02, 2007

SPX: Pieces Of The Puzzle Coming Together

Over the past few days I've been saying that I needed more pieces of the puzzle to come together so I can determine if I am looking at a bull or bear as far as the stock market is concerned. Well, it's the end of the week and some of those pieces are beginning to form a picture.. I see a bear not a bull.

Both the NASDAQ Composite and the SPY formed weekly bearish engulfments today. Keep in mind February was a monthly bearish engulfment for the SPYs which I commented on a few days ago.

Usually at the end of a week I'll check for weekly engulfments and I can find on average maybe 5 or 10. This week I found over 250! I've never seen so many before at one time. That sends a message to me that the market will probably move lower not higher. Some of the markets that have weekly bearish engulfments are: EEM, RTH, MDY, XLB, XLE, NIKKEI, EBAY, AMZN, RIMM. SLB, X,YHOO,NUE,SLV....and many more.

Does this mean I am expecting a bear market or a crash? I'm not thinking that at all. I think the market will correct for a few months eventually setting up a buying opportunity, but for now I will be playing from the short side especially if this week's lows are taken out next week.


miamirenter said...

is there any way to short the indian market..i know EEM ..but any pure indian play (i know infy etc)..but was more interested in the whole market (like EEM)

Kevin said...

Good question..I haven't really looked into it.. I'll see if I can find something.

Kevin said...



This site may include market analysis. All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Trading and investing involves high levels of risk. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise.
Technorati Profile Finance Blogs - Blog Top Sites