Tuesday

Better Days

Post a Comment May 25, 2010 – 1:37 pm |   | Permalink |  Print This Post |

As bearish as we are and even though our indicator remains “overvalued”, usually market tops are retested. Some argue that the Dow has double peaked. We beg to differ. We will take some profits tonight.

We wrote this on 18 May:

short Dax $10/point 6140.

Based on our indicator, the coming decline will be big.

The Dax remains one of the strongest index, and has more room to fall. We will take half profits - close $5/point at 5630, taking $2550 profits.

We do not know where the bottom will be for this decline. Our guess is another step down to kill the bulls and to embolden the bears. Then a swift rally to about 11000. We will aim to take some profits here or slightly lower then reanchor our shorts at 11000.

1937 vs 2007 Bear market

screen-shot-2010-05-25-at-112724-pm

Based on the 1937 model ( I know, it doesnt make any sense) - we are VERY close to a short term bottom. Another 1-2% then strong rally up.