Ian Woodward's Investing Blog

The back and forth by the Bulls and Bears is certainly interesting.  Yesterday we had a 4% down day and today we bounced back over 2%.  So the Pirates of Penzance were foiled this time but they will be back soon.

The reason I say that is that every technician has latched onto the rising wedge syndrome, a sure sign that the Market is overbought and over-reaching:

Now that we had an Eureka today to counter the Phoenix of yesterday, the Bulls are still in a tenuous control, and can resume their efforts to drive for the next logical step of 900. Alternatively, Bears come roaring back and break the trend by driving the S&P 500 to the last line in the sand at 780 before there is the likelihood of further capitulation and deterioration of the 401-K’s around the country.

The cushion we now have on the downside is 8% and 14% to and from the Line in the Sand at 780 as shown below.  I cannot lay out the Game Plan any simpler:

What then is the Dark Cloud over the Market?  The Health of the S&P 500 Earnings Reports.
I laid the problem out at the Seminar and it doesn’t take any explanation.  The Pessimists
say we cannot support more than 400 to 600 on the S&P 500 – the gloom and doom scenario.
We may not get out of this problem for at least another two quarters.

Meanwhile the 1937-38 Scenario is still intact for those who got the Woodward and Brown
Scenario, so keep your fingers crossed.

Best Regards, Ian.

This entry was posted on Tuesday, April 21st, 2009 at 6:28 pm and is filed under HGS Principles, Market Analysis. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.