Long term bullish or bearish?

Question

I'm a technical guy, and this is what I see on the S&P:

Downtrend channel from October 2007 broke in April (intermediate move). Then, classic aggressive return move to the channel, before snapping back. Now, there seems to be a consolidating move with extremely heavy volume, possibly indicating a bottom.

I'm also looking at the Russell 2000, which was unable to make new lows on the decline this month (lows still in March).

The S&P lows were 1300 in March, so once that is broken I would expect the bull market to start getting in gear.

What do you think?

Answer 1

don't forget the tightening of credit.  the banks aren't letting the liquidity flow.  the government will have to start passing out welfare checks again.

and look at the interest rates.  they are still too low.  if interest rates rise, equities will fall.  

inflation and debt levels are killing the consumer which is 70% of the economy

Answer 2

Comment on Visa, they looked good today in their reports after the bell it seemed.  I believe Visa and Mastercard are more just the service and processing of payments.  They don't actually hold the assets or have the assets at risk.  Visa, for example, is the supplier and servicer for the credit card I have with my credit union.

I believe American Express (who took a slam) is opposite, they actually run the risk for the defaults to hit their bottom line.  We might see regional banks face more consumer debt defaults.  Naturally, the cost for credit will likely increase.

For those with higher balances on "no interest rate" type cards, there is often a provision that allows the credit company to raise these rates substantially (and unilaterally) so now is a bad time to run up the balance, incur the wrath of the company and have your 0% rate change to 20% or more.

Answer 3

We aren't going to be seeing another bull market for a few years. Stop lying to yourself to try and convince yourself you can beat the markets or that things will get better. The market will descend for a bit yet, and only the weird logic of crowd psychology will decide if we enter a bull market. Plus as a couple of others have already mentioned, there are a lot of problems yet to be faced which we will need to find solutions to before the economy can rebound.

Answer 4

I love technicians...you've completely ignored the fact that most US states are running record deficeits and that the Fed is in BIG trouble...500 Billion worth of it...You can look at charts and numbers all you want but there's more to the market than "trends".  Suffice it to say that we've been bear for only a year and a "typical" bear cycle runs at least 2 years and usually more like 3 before we go full on bull again for 5-7 years.  Having said that we're not at the bottom yet and you needn't seek confirmation for that.  Are there some opportunities now...I'd be foolish if I didn't say empahtically...YES---it's always better to be BUYING in the downtrend than in the up...GOOD LUCK!

Answer 5

I agree with Bigm57.  

You can look at the technicals all you want, but some market manipulation is happening right now visa vi the SEC, and FED Reserve.  

You keep playing their game - you will find yourself on the bottom with everyone else who has been following that pide piper.  

Inflation is going to really start taking a bite out of the market - why do you think the SEC has come up with their no short list?

Inside info:  4 Top Economist Merrill - last year  -

1 said the Market goes to 15K

2,3,4 said the market would go to 5K

If you are an active trader you know money moves 2/3 faster down as it does up.

read: the collapse of the dollar and how to profit from it.  

The US is heavily debit ridden  - so are the Europeans - German Welfare State will bring down the EU.

Last: You make the assumption incorrectly that the FED, SEC are trying to move the market up - what is really happening?

Answer 6

Your analysis is completely correct, but I doubt your conclusion "once that is broken I would expect the bull market to start getting in gear."

Short term market run on emotions ... note June and July's patterns.  Long term (I think) is what you are asking.

Yes, your analysis is correct.  However, a market does not run in a vacuum.  Look around you ... see the crushing debt.  We still have not completely dealt with the construction loans that are coming down the pike.  This housing mess may have some support with the new housing bill signed today, BUT where does the debt go?  On the backs of every American taxpayer.  Can we hold that weight?  Probably, but it will definitely slow us down.

Other things to consider ... credit card debt, which is crushing many American consumers.  If they choose to pay down debt, they can't spend ... the money flow is stopped.  That is never a good thing.

I'm a long-term bear looking for opportunities amongst an ever quickly shifting market.

Answer 7

I believe the lows will be taken out or at least a double bottom will be put in.

Put stops in on all your trades.

Answer 8

Long Term Bear.

Consumers are tapped out and need to start paying down record debt.

Where are the earnings going to come from?

Record debt both consumer, government will weigh heavily on the economy for years to come.

P.S. The next shoe to drop will be credit cards as consumers use these to live day to day on.