Weekend musings as hope floats markets up and what may lie ahead

Louise Yamada interviewed on Bloomberg TV last night stated that volume's been light since players aren't leveraged 20 or 30 times anymore; so we should think of this as the "new normal." She also thinks that a pullback would be good for the market, considering that it should be only about 10%. Since a 10% pullback would get the market to the levels we're now seeing with that "max pain" calculator (see the "max pain" site in the "other sites" listed at the right side of the page), we shouldn't be surprised if there's a pullback to that point as soon as this upcoming opex Friday. I've shown here Thursday evening and again yesterday how many market indices are displaying a price channel or wedge, so it will take a break under those trendlines for a pullback like that to happen.

What's next after that? There's reason to believe that after a pullback, there's another move up, and then it becomes interesting to speculate whether that next move up is a lower high or leads the market to yet higher rally levels. Today I am entertaining scenarios either way. While I don't "follow" the Bradley model, I grant that it did a nice job to point higher into June; and it's showing that after a pullback into about June 26, there's a rally to a higher point into mid-July. From a chart perspective, I don't have a quarrel with that, even if I don't have an active Elliott Wave count for it.

Interesting point at Charts and Coffee blogspot in the post from Thursday evening, What Do I See? (6/11/09) that there's a lot of bearishness out there. (And by the way, a nice review there recently (I believe on 6/10) of TLT showing that $87 may have been the right buy point on chart analysis of TLT). On the one hand, there does seem to be that in many places, and yet in others there seems to be a tacit shift in assumption that a pullback is likely to come along but won't retest the March lows. Is that assumption likely to be right? Or is the widespread belief in that scenario a clue that something else may happen?

Kenny at Kenny's Technical Analysis Blog has been working his TA again, this time including some views about sentiment, gold, and the retail sector. I know I've commented recently I thought the retail sector (RTH) looked bad. Well Kenny's chart shows some hope there, even if it will be only for another short-term rally. Although I'm still not keen on the indicators there and its relative weakness compared to the broader markets, so I respect his points but not certain I share his outlook on that one.

Thanks to Forkoholic Serge of Forkoholic.spaces.live.com/ for stating in his post, Elliott Wave Forkology June 11th update (6/11/09) that Friday, June 12 was a "Fibonacci 610" calendar days from the October 2007 peak. Add in 8 more days to get right to 618 days, and that lets us look forward to what happens on June 20. I have thought in terms of measuring 1.618 year from that time, which provided a time window that's about done soon. And I had thought that since the March lows were at 1.318 year from then, that a high into the 1.618 year time window could lead to a new search by the markets for the next low. But that's just my own thought. I can't really speak for Forkholic Serge, and if you just enjoy looking at forks in many charts you'll be off looking at his charts on your own anyway!

Couple of interesting articles at FinancialSense.com:
06/12 Another Ascending Wedge by Carl Swenlin
6/12 Gold is Still Money by Robert Prechter

I don't know that the way Carl Swenlin views the pattern in the S&P 500, as an ascending wedge, is exactly the way I pointed out here a couple of days ago, but close enough really. And he includes views of the McClellan Oscillator (something I also pointed out at my UBTNB3 blogspot yesterday) that are worth considering, as it looks like bearish divergence for the equities markets has been continuing.

I'll be back later in the weekend with more!