This isn’t just “another 10% correction”

I’ve recently been seeing a prevalent view point about the market starting to sprout up, essentially that this past 9% correction is just like the June-July ‘09 correction, and that we should soon see new trend highs. I disagree with this view, and I’m betting that we’ll break 1040 soon.


Take a look at the /ES (S&P 500 e-mini futures) weekly chart above. Compare the volume on both corrections: the first correction had withering volume over 4 weeks, followed by equal or higher buying volume when the market blasted higher.

In the January ‘10 correction, we saw massively expanding volume on the downside, and withering volume on the upside progress. This tells me that the tide has shifted.

Even if we do make a new trend high, I will continue shorting into this strength based on the massive volume distribution we’ve seen. Good luck!


Dave Narby said...

Agree, that first correction was gunned by TPTB, smoking the shorts and implementing plan "Reflate or Die". This one seems like distribution.

Probably get a correction to 940 or so, then back up again to a new high, then the system really crashes. But what the hell do I know, I just read what they put on the intertubes.

Anonymous said...

I flipped through some of your older posts and found that you were last bullish on stocks in Sep-08?? Talk about missing the boat. You may be right that the rally may be ending here, but you may also be wrong.
Making money requires that you take calculated risks, but if you're wrong, you should cut your losses and reconsider your position.

Narayana said...

Yep, I was wrong.