Wednesday, November 25, 2015

A Moment of Truth

The SP hourly chart shows resistance at the 2095 level. 

Could be an expanding diagonal that will resolve itself on the downside at the 2050 level.  That would be the fifth wave of the diagonal with 1 - 2065, 2 - 2095, 3 - 2070, 4 - 2094 and 5 - ?

While I'm looking for a close above this level on Friday, I've been a bit concerned with dwindling volatility levels and apparent resistance at 2095 (210 SPY).  210.04 is the Friday close of three weeks ago, that I expect to be testing Friday. 

Thought that we might blast on through this level but nope.  It's not happening.  Could be that we will go through on Friday on extremely light, holiday volume, when the powers that be can whip the market around to their hearts' content.

While many are suggesting that we are in the final wave up in this long-term bull market, and the wave counters can show that yes, we are in wave 5 of the 5-wave bull market that began in 2009, I'm cautious and added some Dec 31 puts. 

A breakout above the 210 level on SPY would cause me to react with some call buying but what I'd like to see is a three-month test of the low at 191 in December.  A successful test the lows on the three-month basis would get me very bullish and prepare for a move to all-time highs.

As we stand now, it is possible that we will break through the 2095 level and go higher.  Momentum suggests that this will happen.  There is still too much inconsistency though.  As one looks at interest rates and commodity prices, being at multi-year lows, one must think that one of these days, the stock market bubble and bond bubble, will burst and stocks and bond charts will also look like the commodity charts.

But we have seen, Central Banks have done everything that they can to prevent this from happening.  Unfortunately, they will also have to be crushed if this scenario is to unfold.  It's inevitable, or so it seems.  But it also seems that they can continue the charade indefinitely.  Perhaps IMF will come out with a new global currency scheme before this happens.

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