Mercury Rising 鳯女

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Archive for June 30th, 2010

Breaking bad

Posted by Charles II on June 30, 2010

This has been a bad week for the markets. The omens for tomorrow look bad, too. Nikkei down (but Shanghai marginally up; Hong Kong on holiday), US futures half a point or so negative as of 11PM Eastern.

From a technical standpoint, the markets are headed for 940 on the S&P, a further 9% correction and a 25% overall drop, corresponding for you lovers of Fibonacci series to a 50% retracements of the path from 666 in March, 2009 to the high this spring around 1250. For chartists, this represents a breaking below the neckline of a head-and-shoulders formation, one of whom Mark Hulbert quoted as follows:

Earlier this week, [Dow Theorist Richard] Russell wrote that the breaking of the head-and-shoulders formation would have very bearish consequences: “All previous plans, scenarios and strategies will hit a stone wall. Wall Street and public sentiment will turn black-bearish. Consumers will head for the storm cellars, and, once in, they’ll shut the door above them and lock it.”

Not to mention crawl inside the bathtub and cover their head with a durable cooking pot.

Unless, of course, we get good news with employment on Friday, in which case everyone will forget about all the doom and gloom to rush out and buy.

My own bets, hedged of course, are for a downward trend in the near term, with manic rallies and frantic retreats until the election is resolved. At that point, if the Republicans win, we’re in for real trouble, whereas if they get routed, the market might yet live to see another day.

Or, you know, not.

Posted in financial crisis, stock market | 1 Comment »

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