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Graham Summers’ Weekly Market Forecast (line in the sand edition)
Last week I forecast
that stocks would either re-test 1,040 and breakdown or rally to 1,100. Stocks
once again opted to accomplish both of my forecasts falling to test 1,040 on
Tuesday before starting the mother of all ramp jobs Tuesday afternoon into
Friday.
All in all,
stocks rallied over 5% in the span of 72 hours. The move started off as the
most obvious manipulation in history, with stocks exploding higher in the final
15 minutes of trading in August to insure that the Dow closed the month above
10,000, which appears to be the proverbial “line in the sand” that the PPT has
drawn (more on this in a moment):
However, the
ramp job continued into the overnight session, with stocks exploding, and I
mean EXPLODING higher Wednesday on a flurry of headlines ranging from the
political “Obama may replace Geithner
with Michael Bloomberg,” to the economic “ISM manufacturing index came in better than expected, above 50, which
signals economic growth” to the desperate, “Obama is planning yet MORE tax breaks and stimulus efforts.”
Regardless
of the validity of any of these items, one thing has become clear: the Obama
Administration and Democratic party are desperate not to get thrashed in the
coming November election and they will be pulling out all the stops to try to garner
votes.
This
includes “holding the line” for stocks.
It’s now
clear that 10,000 on the Dow and 1,050 on the S&P 500 are the proverbial
“lines in the sand” at which the PPT will intervene in a big way. I’m only showing the S&P 500’s
chart below:
This line has
and will continue to be significant going into the November elections. Remember,
the stock market is just about the only thing the Feds can point to as proof of
a recovery, so they will be pulling out all the stops to keep stocks afloat.
The key
issue is whether or not things will become so ugly that the PPT cannot “hold
the line.” On that note, the S&P 500 has managed to clear 1,100, but just barely. It now has a cluster of
overhead resistance between 1,110 and 1,126.
We’ve also
got the 200-DMA at 1,115. This would be the most likely target for a reversal.
However, we need to remember the vigor of the ramp jobs that have occurred this
summer so far.
To wit, from
its intraday low of 1,010 on July 1 to its intraday high of 1,099 on July 13,
the S&P 500 rallied 8.8% without taking much of a breather. If this current
rally were to follow the same pattern, we would see the S&P 500 at 1,131
before things cool down.
Personally I
do not think this will be the case. But I wanted to at least acknowledge this
scenario in case the “powers that be” are really hell-bent on forcing the
market higher for political purposes (again the stock market is just about the
only evidence of a “recovery” the Feds can claim).
My view is
that we’re likely to see the S&P 500 butt up against the 200-DMA or
possibly even trade above it briefly. However, this will prove short-lived. As
the below chart shows, the 200-DMA has been put a lid on every rally since the
April top.
With
economic data worsening by the week and the European banking situation not
improving , I think that a break of the 200-DMA on the S&P 500 will in fact
serve as an excellent shorting opportunity with initial downside targets at
1,090.
Should
things get ugly, then we’re likely heading to 1,060 in a hurry. And if, and yes
it’s a relatively big IF right now, we take out 1,040 convincingly, then that
will trigger the massive Head & Shoulders pattern on the S&P 500 which
targets 880.
To summate,
on the intermediate to long-term I am SUPER bearish. But this week we could see
some additional upside before stocks roll over again in a meaningful way.
Good
Investing!
Graham
Summers
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The right-hand shoulder looks like it is becoming a small H&S in itself.
Bush used the PPT to rig the market after 911. Clinton did it too, now Obama. Might sound strange but when you wake up to the fact that the all work for the New World Order/illumanate it becomes very clear that the owners of this country keep us hooked up to the false right/left matrix so as to own both parties and keep their boot on our neck.
Alex Jones has a great explanation of this in his movie The Obama Deception. You can find it on youtube.
http://www.youtube.com/watch?v=eAaQNACwaLw
What's with the shills posting in the comments? If I want falsified metrics and garbage analysis, I'll tune into CNBC. You know who you are.
Perhaps one of the worst articles ever posted at ZH.
"Last weekI forecast that stocks would either re-test 1,040 and breakdown or rally to 1,100. Stocks once again opted to accomplish both of my forecasts"
I hate to break it to Graham Summers, but to suggest that stocks will test support and resistance isn't exactly brilliant or unique. Then he shills for his newsletter which probably gives us MOTS, you know, things like "stocks are either going to go up or down, although research suggests it's possible that they trade in a narrow range."
Breathtaking shit. Then throw in a little PPT and you're sure to find some sucker to send in some money. Thanks, Summers. It's fuckwads like you that are fueling the mass exodus from equities. I look forward to reading your PM newsletter (or whatever else is the new new) in six months or so.
One can only agree, but the Fed do this with every indicator that looks bad for them. During 2007/8, they capped the gold price quite blatantly with massive selling, regular as clockwork, in the first hour of every day they knew bad data was going to emerge.
It would be OK if they were subtle about it, but they demonstrate all the subtlety of Greenspan dancing Swan Lake. It'd be amusing to invent a name for this kind of interference in allegedly free markets which must always decide: decisional stimulation?
http://nbyslog.blogspot.com/2010/02/gold-market-manipulation-suspicions....
its funny to see 'manipulation' as a factor in technical analysis....
"To summate"
is that you, george?
Is there a way to find out who is buying?
If the general masses have no money to be spent, and banks are in bad shape, then who the hell is buying in this market?
Why not flip the question around and ask "who is selling"? Nobody I know of has sold any stock, but everyone I know is looking to buy stock as the market is dirt cheap right now.
I know many seniors and people who have cut back their consumption with the specific purpose of taking the money they save and put it into this dirt cheap market.
Also, people are taking out more stock loans and going harder on the margin, buying this cheap market, seeing the trainwreck of inflation, due to very low available capacity, starting to creep up on us.
Imagine yourself two-three years from retirement. Would you go all in with your retirement savings. No! And that's why your comment is as idiotic as every other "there's money on the sidelines"-comment. When you start resorting to money on the sidelines, you should probably consider whether you are the (biggest) fool in the game. And when you start talking about dirt cheap stock, maybe you should factor in the unprecedented period of low interest rates and ask yourself two things:
1. Are markets higher now, than ten years ago
2. Would the markets even be here if it wasn't for Greenspans printing
In case you wonder, the answer to both question is no.
1. No. Which makes them an excellent bargain since earnings have grown dramatically since.
2. Yes, although probably dominated by industrials instead of financials and pseudo-financials.
The market is NOT DIRT CHEAP by any stretch of the imigination. NOBODY is in the market in stocks, the retail investor is dead and nobody wants to play anymore. See the ZeroHedge link you zero:
http://www.zerohedge.com/article/jim-rickards-tells-his-clients-get-out-...
12-15X earnings when the 10-year note is down at 2% and TIPS are at 1% real, isn't 'dirt cheap'? Look, I'm only a few decades old, and I've never seen such a wide spread between earnings yields, and government bond yields in my life. In the midst of a recession, nonetheless, which makes the situation even more insane.
TIPS are trading at a stock P/E equivalent of 100, while you can buy most of the stock market (the stuff that's actually worth owning, not random trash like GOOG) for 8-12X earnings. So I don't know how anyone can call equities expensive in this environment, when they should be at least 3X higher given experience in prior recessions.
People who call equities 'expensive' are implying that all of the cost cutting and productivity measures over the past decade (ie: outsourcing, automation, cheaper IT, no employee raises in real terms, 15% population increase, etc.), in an environment of substantial price increases, haven't amounted to a hill of beans. I simply refuse to believe it, and sooner or later the retail 'dumb money' will get its ass handed to them when the currency takes a dump.
50 billion more tossed at a potential job recovery.
green shoot jobs must have been buried by the "shovel ready" jobs.
"Somewhere along the line, you simply cannot prop up a lie, no matter what."
You can bet your last upcoming trillion dollar bill (which will be sporting Obama) they are going to try.
The Powers That Be (TPTB) reminds me of several other famous people - "They Say", "Santa Claus" and "Micky Mouse". All very real for people over 12 years old, who fall under the mental health act.
Give your head a good stiff bang and come to your senses. So you are tell us that TPTB simply "move the market" whenever they wish to? Do they need to get imprimatur from the Bilderbergs or Rothchilds? Do they use carrier pigeons to get the go ahead so their communication is not tracked by the black helicopters above???
I think the last 2 paragraphs of this napkin are a good give away of the real intention of this article.
TPTB are the Fed and the US Treasury. They buy futrues and equities, and helicopter Bens said as much in whis Jackson hole speech. Where were you , did you not believe him or take him at his word????? They are officially knows as "The Working Group", and yes everybody with half a damn brains can see their handi work. Just look at Friday's ramp up job in the last fifteen.
Pull your head out. They can move the market, they however cannot avoid a major collapse or crash, otherwise they would have stopped this earlier and "resuced us".
You may want to read the ZeroHedge article below:
http://www.zerohedge.com/article/jim-rickards-tells-his-clients-get-out-...
Obviously you either clean the pigion schit out of the cages or are the gas boy for the black helicopters...
The Consumer will decide. No one in my Household has debt. The Shadow army grows.
Eighty percent of the workers never seen it coming or cared I work with.
Hold on to what you need.
http://www.youtube.com/watch?v=8iyDZBAFxKE&feature=watch_response
True, but volume is nothing, and Europe is catching a cold that will lead to contagion. PPT cannot "hold the line" when that shoe drops. Volume will skyrocket and everyone sees the writing on the wall.
TPTB had better stop the manipulation, because poeple are tired of seeing it. When a CNN poll shows that 81% of the country thinks the economy is in terrible shape, there is something wrong and no amount of Wall Street WhiteWash is going to clean the stain, let alone the crisis. Someone is going to get their neck proverbially stretched. Tar and feathers are back on the menu, and they are being ordered at no cost to the politicians that continue this stupid and unsustainable spending, then lying about it.
We have 3 quarters of declining GDP and starting on a fourth, certianly the economic wizards and the MSM Economic reporters are going to call Bullshit on this sooner or later, right? Somewhere along the line, you simply cannot prop up a lie, no matter what.
Who let Debbie Downer loose on ZH?
S&P500 only to 1130? That's just noise. Why such a negative commentary when the market is amazingly bloody cheap for being in the midst of a recession/depression?