Market Observations 03/16/06
As mentioned in previous posts, we called for a market inflection to occur on or about March 10th.
Since that date the DJIA, SP500, MID, RUT, NYSE, OEX have all pushed to multi year or all time highs.
Even though the yield curve has "exited" its inversion, the 6 month is still above the 30 year. March 23 will be 6 weeks since the 2yr went over the 30 yr and remained there for over 4 weeks.
After the Jan 2000 inversion it took 6 weeks and 2 days for the market to begin to tip over on March 10. 6 weeks later in mid April the market truly crashed.
In 02/27 Market Observations we commented:
"An overall market break out to the upside on higher volume with conviction would lead us to look towards 1335 SP500, 770 RUT & perhaps 1790 NDX as possible climax points."
Around April 14th should be the next major market inflection point and we could continue to rise till then. At this pace, a 1395 reading on the SP500 which correlates to DJIA over 12,000 is not out of the question.
Despite all the "happy daze" uptalk, we still sense the potential for a very dangerous downside to this market. VIX call options are still looking very attractive.
2006 is the year that both the bulls and bears could be right and we may just see it all, DJIA 12,000 and DJIA 7500.
Since that date the DJIA, SP500, MID, RUT, NYSE, OEX have all pushed to multi year or all time highs.
Even though the yield curve has "exited" its inversion, the 6 month is still above the 30 year. March 23 will be 6 weeks since the 2yr went over the 30 yr and remained there for over 4 weeks.
After the Jan 2000 inversion it took 6 weeks and 2 days for the market to begin to tip over on March 10. 6 weeks later in mid April the market truly crashed.
In 02/27 Market Observations we commented:
"An overall market break out to the upside on higher volume with conviction would lead us to look towards 1335 SP500, 770 RUT & perhaps 1790 NDX as possible climax points."
Around April 14th should be the next major market inflection point and we could continue to rise till then. At this pace, a 1395 reading on the SP500 which correlates to DJIA over 12,000 is not out of the question.
Despite all the "happy daze" uptalk, we still sense the potential for a very dangerous downside to this market. VIX call options are still looking very attractive.
2006 is the year that both the bulls and bears could be right and we may just see it all, DJIA 12,000 and DJIA 7500.
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