Sunday, March 04, 2007

SPX: Time Targets

Some of you asked me to post my price targets for the SPX which I did on my last post, but in addition to that I'd like to make a few comments about time.

Assuming the market is going to continue to correct ( I do believe this is a correction and not the beginning of a bear market) I think it's important to look at previous pullbacks as far as time is concerned.

You'll notice in the above weekly chart of the S&P that all the pullbacks in this uptrend have lasted anywhere from 6 to 23 weeks with the average pullback lasting 13 weeks. So far we have a 1 week correction. This is why I think it is way too early to begin looking to buy now. We must allow more time to elapse before we can even think about buying stocks.

For those of you looking to buy, the ideal scenario in my opinion would be for the S&P to be trading at the moving averages I discussed in my last post in about 8 to 12 weeks from now. I think that would be a much safer "time" and place to buy than right here.

I plan on playing this market from the short side in the weeks to come.. We'll see how things work out.


Sandro said...

Not really looking to buy - rather covering my shorts and selling my puts

Sandro said...

You will find it interesting, but 5 days before the crash I've maid this comment here in the blog:

"Kevin, fundamentals are telling me that there is a big market sell-off coming within two weeks.

What the charts are telling? I have little clue in charts. Do you see anything?"

That was February 22nd. The next day I've loaded over $3k of puts in addition to some shorts that I already had.

They played quite well next week.

This blog is the most helpful in terms of charting that I know, thanks!

Kevin said...

You're welcome Sandro.. I'm glad you're making money...nice work!


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