Cycles Say The Bears Are About To Roar

By: readtheticker | Wed, May 11, 2011
Print Email

The Stock market pushes higher and higher, what fool would take a short position against this mighty liquidity pump up, however there are a few dark clouds in the next few months: US Summer is seasonly poor, QE2 ending, earnings are peaking, Greek woes. When the SP500 sinks, historically the US dollar rallies, transports fall and funds rotate out of aggressive stocks to defensive stocks. Let's review these cycles to see what we can expected next.

Dow Transports: If Transports fall, this can lead to a Dow Theory Sell signal.

Defensive Stocks: If folks are bearish, they begin to rotate monies into defensive stocks.

US Dollar: If the risk off trade is the theme, then the commodity currencies and the Euro will fall, the offset will be a rally in the US Dollar. A rising US dollar will wipe millions off the sales revenue of SP500 companies, thus earnings will be lower.

Between 2009/10, many cycles suffered an inversion to price, this was due to very bearish sentiment reversing on massive quantitative easing (QE1) from central banks around the world.

The cycles show all are due for a rollover, it is going to be very interesting in the next three months. No wonder sector rotation into defensive stocks is the current theme in the SP500.

QUESTION: Are the bears about to roar ?

If you concur, SPY puts and bearish ETFs should be on your menu near the end of May 2011.


Larger Image


Larger Image


Larger Image

 


 

readtheticker

Author: readtheticker

readtheticker
www.readtheticker.com/
www.readtheticker.com/Pages/Blog1.aspx

We are financial market enthusiasts using methods expressed by the Gann, Hurst and Wyckoff with a few of our own proprietary tools. Readtheticker.com provides online stock and index charts with commentary. We are not brokers, bankers, financial planners, hedge fund traders or investment advisors, we are private investors.

LEGAL DISCLAIMER: The material is presented for educational purposes only and may contain errors or omissions and are subject to change without notice. Readtheticker.com (or 'RTT') members and or associates are NOT responsible for any actions you may take on any comments, advice,annotations or advertisement presented in this content. This material is not presented to be a recommendation to buy or sell any financial instrument (including but not limited to stocks, forex, options, bonds or futures, on any exchange in the world) or as 'investment advice'. Readtheticker.com members may have a position in any company or security mentioned herein.

Copyright © 2011-2014 readtheticker.com

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com

SEARCH





TRUE MONEY SUPPLY

Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/