Markets consolidated during the last two trading days after the sharp sell-off on 6/6/2008. As shown on the Qs daily chart, I remained on the bearish side when Oil price was spiking in May. During May, markets consolidated after a strong reversal on 3/17/2008 with double bottom formation. For Qs and Nasdaq performed better than other major markets remaining above 200daily MA support while DOW/SPX has traded below 200 daily MA as shown on the daily charts.
Markets are trading at pivotal supports, pausing from the sharp pull back.
Qs 48, SPX 1350 (50% RT), DOW 12200 (61% RT), and NAS 2430.
As commented during May noting bearish signs and facts such as high oil/energy prices, increasing unemployment number, negative consumer sentiment, increasing trade deficit, increasing national debt, unstable housing market, etc. are certainly overwhelming negative factors for economy. I have shown comments relating to high risk associated with having trillions of US debt and financial sector instability even though it may not be as highly risky as it did during January 2008 Bear Stern fall out.
The Fed intervention to stabilize financial markets during Jan-Mar 2008 was highly respectable action by which I am impressed with the power which we can rely on. I have said that the Fed has strong power which can direct market actions even during 1929. This conclusion is based on my historical market price analysis and sentiment unlike many are thinking that bubbles and crashes happened uncontrollably. Focusing on the Fed action, even though the Jan-Mar 2008 intervening action was impressive, we now have seemingly uncontrolled oil price spikes. Even though oil price appears to be out-of-control, it is evident that the price is manipulated by the large funds as I conclude based on the TS Paulson's and Goldman's comments. Therefore, the oil price spike is encouraged by the political and financial power houses.
Even so, it is not clear whether the Fed members are also collaborating with the oil price manipulation. It is likely that the Fed is standing on the sideline when the political and financial powers make billions and trillions by manipulating oil price.
I noted bearish factors on my previous comments. To restate, on the VLT 25yr SPX chart, I have shown bubbles and burst periods during which many Americans lost real net financial value. When markets are making parabolic moves, most of market participants will lose money as large gains are made from the majority who lost the net value. This was the case during last 1990s internet and technology bubble and 2000-2002 crash. The bubble and crash was followed by the ARM bubble and crash in 2003-2005 during which many Americans spent home-mortgage loans. Many Americans are now in financial trouble after going through a sequence of bubble and crash. And, we now have less middle class Americans as a result of the financial swindle bubble and crash period during the last few decades.
As noted, because of election year manipulation to help Republican, markets are holding up. Furthermore, as Paulson is increasingly getting involved with financial markets exerting his power over markets, US financial and Economic outlook does not get any better except those who are already riding the bubble momentums. The Fed is printing money, then it circulates through bubble and crash to turn the paper money to real wealth when many Americans lose money. You can refer to the US debt chart which I have shown many times.
Weekly Charts are showing decreasing momentums. I
commented on the resistances on May 26 that markets are
showing high risk with oil price manipulation making billions and trillions off of oil price hype.
Qs weekly shows 50.60 +/- resistance with H&S formation. As noted Oct 2007 market top was phi turn date. The date is also known as "Golden number" and now with higher oil price, I am thinking that the Oct 2007 top will stand until market finds LT bottom. If oil price is not spiking since May, I would be more positive, but the oil price certainly spills negative effect on the markets regardless the Fed massages the definition of "Inflation" and how they calculate inflation rate. Many Americans are hurting with higher energy costs after ARM crisis among other political and financial crisis since 2000.
SPX weekly shows 1440 resistance right shoulder of H&S formation at the down trendline and weekly 40ma R. I have shown SPX EW charts showing EW counts and down channel formation since Oct 2007 top. Markets are clear on the down channel as of today. I do not think that financial sector found LT bottom as we are dealing with multi-decade bubble crash even though we do not see the crash on the major markets, it is clearly sudden death for some banks, e.g. BSC and WM.
$BKX closed at 68.33 after it has broken 75 support, it is trading lower targeting 63 +/-.
Gold traded lower closing at 871.
In conclusion, markets are trading at pivotal supports, pausing from the sharp pull back. Qs 48, SPX 1350 (50% RT), DOW 12200 (61% RT), and NAS 2430. I stated reasons for being bearish, but also noted market manipulation. Therefore, will look for price confirmation.
