Ausblick kuz-/mittelfristig

aus Gene Inger´s daily briefing (www.ingerletter.com)

Meine Zusammenfassung: Di-Mi-Do = Island reversal, d.h. gap down und anschliessend gap up, extrem starkes Zeichen für Trendumkehr. Heute gehts noch rauf, nächste Woche hin und her, und dann erst mal weiter rauf.

...so why are we so pleased with the action? Is it the achievement of 1325 yesterday in a spate of panic? To be sure that was part of it; at least the initial "buy 'em" amidst chaos guideline at the time. And yes, in a humble way (even more humble than usual), we'll be delighted to claim we called this, because we've been doing so since last week, including the preliminaries and the belief that nothing was initiating, and that any big break of the type we got would 'culminate panic not initiate it'. So is that it? Partially; sure. But what's the big point? This was an Island Reversal.

...In summary . . . Wednesday's morning decline of 400 Dow points maximized the pain; which (no offense) was thrilling, as it potentially ended the suffering, per our discussion last night, though it wouldn't seem like that at the moment of increased market duress, which is why we cheered the market to the upside when it looked the worst at yesterday's opening implosion. We shared here repeatedly that the time for protective measures was way behind (weeks, months or even years, depending on the stocks), with the next (albeit uncertain) effort said Tuesday being a potentially more sustainable rebound than recently experienced. Everything desired today occurred, plus it might even be mentioned that the Trade Deficit contracted; not a minor matter with high Energy.
Meanwhile the McClellan Oscillator rallied to -99, reversing the prior day's downside as breadth didn't chime in with the reversal initially, though in a sense a great many stocks were down a bit, but well of the lows of the day; thus data still looked negative, with action nearly bordering on a confirmed turnaround, with today's other side of the Island tends to affirm. We also pointed out the VIX (Volatility Index) Tuesday night, which we thought was action of a type that should very clearly culminate, not initiate, downside action, for at least the nearer-term. It did that and more.
After a huge single long-side effort Wednesday, we were unfortunately conservatively flat S&P's overnight, but not tonight, where the most recent (near or nearly seamless) long from 1380 is of course held, with an expectation of an up-down-up Friday session . With a 1234 premium around 8:15 p.m., the December S&P's are unchanged from Chicago's regular close of 1401.10, which is low enough to suggest suspicion, or that many don't agree this was an 'island reversal' turn.
Certainly Tuesday looked for efforts to turn a washout; in an incredibly volatile, and dubious way (due to the expectation of Dow 9800 and S&P levels being broken) but as an inflection of fear was seen as at hand. Therefore, we cheered the opening collapse, sought reversals in oversold conditions, in harmony with remaining aware of our views as they regard the most recent efforts being 'false' or preliminary rallies previously; with increasing volatility having generating a better chance to complete October's continuation of September's extended decline with wild variables.
For now, we continue to look for higher numbers overall, as the market tries to move sufficiently high so that there will be post-Expiration declines, but that they will be contained and controlled in a bullish, rather than bearish, technical structure, allowing the market to subsequently rally in a more sustained (well overall, nothing could beat today's) pace over a period of weeks or months. In our view these past days were 'holds' or 'buys' for investors, and in no event sales. Now we're going to have a fight (especially next week), which will likely temporarily embolden bears again, just briefly, after which their contributions will simply assist the ensuing next phase of upside.