Wow. What a year! A mini-crash to start it, and then a historic rally to end it. But certainly, the victory goes to the Bulls in 2009. They managed to ramp up the SPX over 450 points off its lows in early March. Certainly a year that will go down in the history books as one of the biggest rallies ever in the history of the Stock Market.
Entering 2009, the SPX was hovering around 900. But that quickly ended as we crashed to sub-700, making our lows in early March at 666. At that point, if someone was to tell you we would close that same year over 1100, would you believe it??? Well, here we are nearly 70% later, closing the year over 1100. Certainly the most powerful rally ever.
Most of 2009 was biased to the upside, except for January and February, but other than that, we rallied for nearly 10 straight months. But then again, Elliott Wave made it possible for us to expect a rally of this historic proportion. But let's face it. Whether the rally is over, or it still has one last small push left it in, it's coming to an end. We aren't going straight to 14,000 on the Dow from here. To me, 2010 will be a repeat of 2008, but worst. At this point, the short term wave structures don't mean anything. If we make a new high this coming week, so be it. It's not really going to change the long term outlook. According to me, 2010 is going to be a bearish year, whether it kicks-off that way or not.
More than technical analysis, Elliott Wave relies are investor sentiment. What is the every day trader/investor feeling? Bullish? Bearish? This is what drives Elliott Wave. It relies on sentiment, and sentiment only. Honestly, we know the fundamentals don't mean a darn thing. News doesn't seem to effect this market, and certianly, a lot of technical analysis failed in 2009. The only thing that had kept this market going was sentiment. Everyone was bullish. People who tried to follow technicals/fundamentals lost money. And people who closed their eyes and bought everything were the victors.
What amazes me is that there is more bullish sentiment now than there has ever been. There are more bullish investors now, then there was in 2007, 2000, and so on. People have never been this optimistic. Being a follower of market sentiment, my inner-contrarion is saying this market is going down. This is a bubble. There are more people bullish now when the Dow is at 10,000 than there were when the Dow was at 14,000. There are more people bullish now when the Nasdaq is at 2,300 than there were when the Nasdaq was 5,100. This is absolutely insane. Have people forgotten the pain of 2008,? The pain of 2001? Has the everyday investor forgotten what happened the last time the Nasdaq rallied over 60% in a short amount of time? Has everyone forgotten that the last time SPX ran up this fast, it crashed over 50% in the months following?
Many of you may be thinking, "Hey, this time its different. We have the Government/Fed here to help out, to stop the bleeding, the insure that all goes well." But the government cannot control market cycles, they cannot control every move the Stock Market makes. Let me get one thing very clear though - I am not here to bash the Government in anyway what so ever. I respect the current administration for everything they are trying to do. - But let's get real, in the end, the markets will go where they have to, and no one can stop that.
Mark Twain once said, "History doesn't always repeat itself, but it often rhymes." Very true, in my opinion. There have been many Bear Markets in history, some small and some large. The one that I believe we will follow is the cycle from 1929 to 1932. Looking at those charts from 1929, the pattern that developed is almost a mirror image of what we are experiencing. If we continue to follow that pattern, and I believe we will, things could get a lot worst before they get a little better. Of course, it's not going to be exactly the same, but the overall trend will stay the same.
My long term outlook has been Bearish for a long time now. And I think 2010 will be the year that completes my outlook. My initial target for Primary Wave 3 is 400 on the SPX. If not, I am at least expecting a retest of the March 2009 lows. I really feel that we will start our journey down this year, and start it very soon. Like I said before, for me it doesn't matter if we go to make one last new high at 1150 or not... Because the higher we go, the more we will have to fall.
Well, there you have it. That is my prediction for 2010. Whether you all agree with it or not... I firmly believe in it. It's what my charts tell me, it's what history tells me... It's what common sense tells me. Whether it happens or not remains to be seen. If it doesn't happen... Great! This country will have escaped a close one. If it does happen... well, good luck!
I'm just going to post my charts all at the bottom, that way it doesn't seperate the reading.
So once again, Happy New Years to all of you! I really hope 2010 is a great trading year for everyone! Good luck!
0 comments:
Post a Comment