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MARKET VIEWS .TV INTERVIEW CHART PAGE

   

 

The following charts are for reference to the interview of George Slezak by Ike Iossif of Market Views .TV on April 12, 2011.

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BOTTOM LINE?  

STOCK MARKET COMMENT 4/12/11

I view the current market position as moving into the most volatile "third leg" of decline. 

Based on the Stock Index Futures COT data and other confirming fundamental indicators, I view the market as over valued. and am looking for technical sell signals. We have a divergent top pattern between the April 6th Dow Industrial's top and the February 18th NASDAQ Composite top. If we view the February 18th NASDAQ Composite top as the "real" top of the market, the move from the failed March 6th retest should be viewed as the violent 3rd leg of decline.

Bonds and Gold? I think crude oil prices will drive us into recession. I look for crude and gold to rise during the violent part of the stock market decline. I look for Bonds to rise, rates fall, during the violent part of the stock market decline.

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STOCK MARKET DISCUSSION

 

Possible top pattern could develop 
into a new (9 to 18 month) bear market.

 

Market valuation

I begin my review of the market with a view on the market valuation.

 3/26/2011 review of market condition  positive neutral negative
COT - Stock Index Futures       X
COT -  %COT        X
Gross Domestic Product    X    
employment    X  
yearly new highs and lows     X
interest rates   X  
Income taxes     X
VIX and VXN     X
crude     X
FX    X 

 
Inflation  

  

 X 
Earnings forecasts - Fwd PE Ratio  

  

 X 
12 month trailing PE Ratio

  

   X

Based on the above, I view the market as over priced and am looking for technical sell signals.

Technical review

The following chart shows the current Dow Jones Industrials compared to the current NASDAQ composite. The Dow recently did a new high for the year on April 6. The high for the year in the NASDAQ is February 18. This divergent top pattern can give a powerful bear market signal "IF" both markets trade below the intermediate lows.

CHART 1

If both markets trade below the intermediate lows, I calculate support based on the length on the last up leg at Dow 11,000 and then Dow 10,000.

CHART 2

Historical pattern review

Each week I post a video review comparison the current market to past market top and bottom patterns since 1888. The divergence pattern between the Dow and the NASDAQ are similar to the Dow NASDAQ top pattern in 1981. You can see in the following chart that in the test of the high the NASDAQ did a higher high when the Dow did the lower high. Following that failed test of the highs, both markets went into an accelerated "third leg" of decline.

CHART 3
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Bottom line: After a 24 month bull market, I look for a bear market lasting 9 to 18 months.

Good luck and good trading!

George

 

 

George Slezak publishes the web sites www.commitmentsoftraders.com (shortcut www.cot1.com ) and www.stockindextiming.com (shortcut www.sit1.com )and www.commodityindextiming.com  (shortcut www.cit1.com ) for a combined monthly subscription of $49 per month.

 

 

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All aspects of any trade recommendations contained in this report are subject to modification at any time. 

FUTURES TRADING INVOLVES SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR EVERYONE AND THE RISK OF LOSS SHOULD BE CONSIDERED CAREFULLY BEFORE MAKING ANY TRADES. A STOP LOSS MAY NOT LIMIT YOUR LOSS TO THE AMOUNT INTENDED.  YOU SHOULD BE FOREWARNED THAT SYSTEMS WHICH TRIGGER FREQUENT TRADING SIGNALS AS PART OF A DAY TRADING STRATEGY CAN RESULT IN SUBSTANTIAL COMMISSIONS AND FEES. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. ANY STATEMENT OF FACTS HEREIN CONTAINED ARE DERIVED FROM SOURCES BELIEVED TO BE RELIABLE, BUT ARE NOT GUARANTEED AS TO ACCURACY, NOR DO THEY PURPORT TO BE COMPLETE.

ANY REFERENCE TO PERFORMANCE IS INTENDED TO BE UNDERSTOOD AS STRICTLY THEORETICAL. 

REGULATORY DISCLOSURES REGARDING HYPOTHETICAL RESULTS

HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.

ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS EXISTS IN FUTURES TRADING.

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