confluence « The Novice Bear

S&P 500 Retracement Target

8 10 2008

I have to say that when I posted a price projection of 925 on the S&P 500 back in mid-September I’m not quite sure I believed it myself. We are not there yet but we are getting pretty darn close. I also talked about starting to see V-shaped bottoms, just like we had back in the last bear market. If there are some scared people out there right now, just imagine what we will see if we make the final push down to the 1:1.618 Fibonacci expansion, thus completing the left side of a V-bottom.

I’m still holding my initial (small) SSO position and I think it is time to explore some possible retracement levels. I’m hoping I have the balls to buy another panic selloff down at 925. Either way, I’m looking to ride any bounce up to confluence levels at around 1150 to 1200.

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Tags : S&P 500, confluence, Fibonacci, price projection
Categories : Uncategorized

Bear Market Rally?

7 06 2008

Did you see the bear market rally talk over at The Big Picture. Barry Ritholtz discusses the recent Barron’s article that raises the question about whether we are experiencing a bear market rally. Mr. Ritholtz draws a few trendlines and wonders if there has been a false breakout.

When I’m trying to determine if an index or stock has truly left the bear behind I turn to weird-wacky world of Fibonacci numbers. I’ve talked about this subject several times on this site and I encourage you to look at how I use confluence for both buys and sells.

Confluence worked like a charm for the 2000-2002 bear market on the S&P 500.

Confluence works for the long side too

Where are we now? The Dow Industrials have already failed to breakthrough confluence and it looks to be headed back down to the lows.

The Nasdaq has less technical damage but it still has failed to sustain a breakthrough of the confluence barrier. It should be interesting watching how fast the money comes out of the Nasdaq once fear hits the markets.