Monday, October 14, 2002
Are We There Yet?
In between the never-ending weekend remodeling, I've been fooling around with Andrews bisects of the SPX Daily and Weekly charts. This "reversal" has been so anticipated, so watched, so wanted, that, from a contrarian point of view, it seems unbelievable that the peons would be given such a gift. After all, the gift to date has been largely a mudslide. Why would the folks that brought us the biggest bubble now make The Bottom so obvious to all? Once again, to try to reason with what happens becomes a game of Spy vs. Spy, a web of unproductive thinking. Mind you, makes for some interesting thoughts, but in the end, one is still left with, "What Now?"
I usually have left the graphs I post at stockcharts.com to speak for themselves. Those who have read my stuff know that I have been more than a bit conservative. What is interesting to me, though, is that a few of my readers have made some nice coin off the calls. What I may see as a limited opportunity, a deft and nimble trader may see as a sure bet. Which is why I so like bisects-- they present at worst a 50-50 probability, that when one throws in a few other indicators (including ones own abilities, intuition, and biases), the odds improve greatly.
I hate to say this, but I just don't see a firm, all pistons firing reversal here. Sentiment is said to be bearish, but with so many eyeballs on this low, it is far too anxious to resume an uptrend. If price soars too rapidly, not only is that a sure sign of a bear reaction rally, but anyone with any sense that did buy those lows-- and there were quite a few-- will take their profits. An outright failure early in the week is possible (drill down into the 15-60m charts where conditions are more overbot), but so too is a shallow retrace and rebound. The character of such a retrace, should it happen, will be telling. Even so, a "good rally" has quite a bit of overhead resistance, ie, more likely selling points, and it may be tough sledding. Not to be on a train leaving the station brings out regret, but then, there is even more regret in not having money to buy tickets for the next train. And there
will be another train.
So, enough of the blather, here is the Daily SPX chart followed by the weekly.
