Are we at or near the peak of this rally?

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Are we at or near the peak of this rally?

Post  Daniel on Thu Jun 11, 2009 8:53 pm

Back in March when the Dow was below 7000 I decided to go long on some stocks. Over the past few months I have been tempted to sell several times but have resisted because the timing didn't feel right. However, I now think I am getting close to the point where I can feel good about selling. Having studied some of the rallies that happen after major drops, I have found that they often peak after 5-6 months and then either move sideways for a while before shooting up, or continue their decent if things are really bad. So even if this is a recovery, then we should see some sideways action coming up.

I have also noted that back in the great depression you could draw almost a strait line between the peaks of the relief rallies. For example a strait line can be drawn between October 7 1929 Dow 352 (very close to the peak of the market) and July 5 1932 Dow 41 (the low of the market) that crosses all 6 of the large relief rally peaks (just pure chance?).

Turning to today's market we can draw a fairly strait line between Oct 8, 2007 Dow 14100 and Aug 4, 2008 Dow 11700 that crosses pretty close to the relief rally peak of April 28 2008 Dow 13050. Extending our strait line to the present we arrive at around 9100 or so for today or 9000 in a couple of weeks time. That could mark the top of this relief rally (if it is only a relief rally).

Admittedly this is a crude analysis, but it does give an idea of when the market may be oversold (like last March) and when it is overbought (like perhaps in the coming weeks).

Good Luck.



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Post  Volatility09 on Wed Jun 17, 2009 7:37 pm

I beleive a top is near..I am looking at the technicals as best as I can to help determine.. We are overbought on the short term, and the volume last week shows that the rally was wearing down as so far the bulls have not been able to take out or stay above 950..This is key. Looking at SKF, there has been a positive divergence that slowly formed as MACD has stayed above the EMA although barely and tight ranged for weeks.. It is slowly rising and nearing 0.. Support of SKF appears to be strong at 39-40. ( basically downside momentum has slowed). SRS downside momentum appears to have slowed as well..(18 is support) These two ETF's are very useful in measuring bearish activity towards the market as they are highly used by BIG and Fast Money traders..I beleive most people think this rally is a false relief rally, but you would not know this listening to the morons on CNBC, like Cramer and Kudlow.. Not to mention all of the bullish guest they have had on for 3 months.. We may stay in a trading range on light volume all summer which would be the worst thing,, We may break thru 950 and go to 1050 or so before the fall.. I will be shorting like crazy if we get to 1000 on the S&P.. Rest assured we will probably break down in the fall and retest or worse.. Hard to Short here and stay short long with the institutions playing catch up in the quarter.. Maybe by the end of June that mess will be over..I guess we have to pay close attention to technicals and see what happens.. I hope things work like they should and we start correcting sooner than later but we all know the Ping Pong bulls will try to keep this ole dog Propped up.. Be careful but be ready to short if the S&P breaks 878.. could short now but stop out at 928. Watch SKF and SRS.

Good Luck


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