Stock Market Choke Points

Part 3A

by Brian Stoll, TimingStrategies.com | April 3, 2009

As I write this first quarter’s reflection and forward estimations, I can’t help but wonder at how in the last 6 months our country, its Constitutional founding premise, its people,

its laws and children’s future has been utterly decimated by the Washington/Wall Street parasites. I consider myself still a reasonably young man, I have two small children, have to work for a living and I rent. I see and read of the corruption, bank accounting fraud, money laundering and financial perversions in stunning disbelief but yet, every week, there is a new scam out of the Wall Street, Treasury/Fed et al menace in further attempts to destroy my country and shackle enslavement upon the rest of us. Without going into further disgust, I simply will state that my new favorite holiday has become Bastille Day and look forward to the reintroduction of the guillotine soon, Viva la France!

With that said the question always remains, what’s the trade? In stock market terms this is by every definition a bear market bounce, a potentially big bounce that could last for 6 to 18 months. In percentage terms from the “666” low on March 6th 50% - 80% “cyclical” bounce is about what I’m looking for. (Whoever says the devil is in the details doesn’t realize the devil and all his details are in Washington and Wall Street, literally)

At some point by this year 2009 my current estimation is that the S&P should hit a target of at least approximately 920-980 before breaking the March 666 low. I’ve included a weekly bar chart of the SPY for closing prices up to Thurs. April 2nd 2009 to show my estimation of how that might line out over the next few weeks to couple months. The dotted white lines hypothetically illustrate the local weekly high at between 840 -880. (I know that’s a pretty big window but this is more art than rocket science) The lowsI have floored right around 770-740. My current estimation is to be a seller of longs and short at the 840-880 level based on price action and other filters for that window and a buyer in the 770-740. The current layout calls for a weekly price expansion from those levels and then a weekly price contraction back into those range levels before a breakout higher up to the 920-980 level. This is… as anything, subject to change and most likely will be readjusted along the way. (When the facts change my acts change)

In regards to the indices vs. sectors vs. commodities gold and oil, I was earlier this year a much bigger advocate of the energy stock sector as the primary leader along with precious and industrial metals to any upside price action. This has changed somewhat recently and my top category preference is for the most part has switched to telecom and the various tech peripheries, including, believe this or not…real estate reits. I still am a long term advocate of energy, metals and agriculture based sectors and their pure commodity resource markets but they have taken a secondary position at this time.

The biggest picture and most significant market ever and always are the bond market and currency markets. This is again the largest source of blatant Washington/Wall Street money laundering and bank accounting fraud. In a nutshell the U.S.Treasury and corporate credit markets are imploding. On a longer term basis the bond market is the next or current disaster and market to avoid or sell short. The difficulty with implementing an aggressive strategy to exploit the nature of that market’s longer term outcome is the Treasury/Fed intermediate term distortions and manipulations of the bond and credit markets. This is designed for several purposes; one significant of which are the attempts is to create a straw market pricing of real estate paper assets in conjunction with the FASB rule on mark to market/model. (Read that straw market/fantasy model)

This blatant B#@$$%T is most likely going to force a cyclical bear market move higher in most all assets, the longer term picture has not changed at this time in my opinion and that being Dow 4000-3500 and S&P 500-450 some time18-36 months from now. For the here and now though, which is all we have to work with, prices are being force inflated higher once again and therefore my here and now estimation is to look for the floor of that range on the S&P somewhere around 770-740 if it gets there and be a scale buyer.

Take my estimations as you should with any financial “readings” and that being with a healthy dose of salt. We manage risk and that’s the best any investor is able to do. This is not a recommendation to buy sell or take any position in any investment whatsoever, if you have any questions please feel free to contact us.

contact information

Brian Stoll | TimingStrategies.com | Registered Investment Advisor
Newport, California | Email | Website

The opinions of FSU contributors do not necessarily reflect those of Financial Sense.