Market Update 090618

Brief Market update 090618 ~

Markets bounced off from the noted vst supports: SPX 903, Qs 35.50, and DOW 8575 which I noted as the secondary supports.

As noted the HOD (high of the day) back-testing the trend break, markets traded in the support and resistance zone.

Thursday, June 18, 2009 1:16:59 PM
Backtest R

$COMPX 1816.60
$INDU 8590.52
$INX 921.93

Market trading volumes are extremely low as we can see that DOW has only 1.07 billion which is a half of normal trading volume.

With the massive debt selling and running up deficit, it is evident that the Gov and the Fed actions are mainly support the Gov expanses to operate instead of focusing on creating jobs. It is foolish to believe that we have a real economic recovery based on debt spending which is worse than the R.E. bubble/crash economy bankrupting millions of Americans.

With the RIMM earning report, futures are positive at the moment even though the guidance was low.

Intraday market actions are mixed as we can see on 60mins consolidated the day. Markets are very overbought, and holding up with artificial price manipulation which could, based on 5th wave scenario, crush down faster than it went up.

Following the correction period, based on Intermediate Wave 5 scenario, SPX 750/666 truncated or SPX 555 which is normal W5 price length.

For VST, the next lower targets are: Qs 34.50/33, SPX 880, and DOW 8200

Given the high risk, it is best to sell the long position as markets have rallied 40% before markets are in full blown sell-off mode. As noted before, being realistic is best dealing with highly risky market condition which we are in:

1) the Gov is continuing to sell debt to sustain the operating.
2) many unemployment check spending is running out the benefit which will cause more trouble with credit card payments resulting in more default.
3) 500 trillion derivative debt is still looming over markets.
4) housing markets are still going through down-sliding which is obvious when we do not have genuine economic growth.
5) not many have home equity to spend like in 2002-2007.
6) interest rate went up which will further stress many consumers.
7) higher gas price will strain many who are in tight budget.
8) markets can sell off very sharp as did before. Just because markets holding up now, does not mean it will be the same in the very overbought markets in narrow range/breadth compared to other market condition such as 2002. As noted before, this economy is not similar as that of 2002-2003.
9) in reality, there is no cyclical bull market with debt-spending economy. It is just a matter of time before the debt-clock runs out.
10) many are not as foolish as they were like in 2002-2003 about the Fed and the Gov activities as we have massive internet communication.

Market Summary:
http://articles.moneycentral.msn.com/Investing/Dispatch/market-dispatches-061809.aspx