The GOAX system defines the market as the SP-500 index. So let’s see if the above analysis and conclusion is in line with how the SP-500 chart looks like. Looking at the chart, we can see clearly a change of regime since 7/19. The market has been trending sideways on marked increased of volume as compared to the previous 12 months. I noted on the previous BPG update that this was a clear sign that heavy distribution was going on. Going sideways as illustrated by the pink arrow is already a big change from the previous and ever rising green arrow. We are not taking about a few months sideway consolidation before the market shoots back up again like in the May-July ’05 and March-April ’07 periods shown below. We’ve been trading sideways in a wide and volatile market on marked increased volume for 6 months now. High volatily on high volume. Hmmm…Isn’t it a sign of a market top? Again, I feel that odds are China will be the catalyst to start a new arrow pointing, this time down and I guess I’ll pick the red color for it. So the chart below suports the 7/19/07 bear market start thesis, the 9/13/07 market downgrade taking effect on 10/13/07 and heck, the RSI is also hinting at a near-term consolidation /churning/retracement up process as long as China doesn’t cave in the near-term!
To summarize, unless proven otherwise, I see no reason to dump and replace the 9/13/07 S.O.M.A at this moment. In my humble opinion, and I may be completely wrong so please think for yourself and arrive to your own conclusions after reveiwing the above TAs provided for informational purposes only, the main trend is DOWN and the market is BEARISH for both the longer term horizons (2 to 6 months). Short-term, we might see some consolidation/churning and positive action once the selling subsides in the coming days. China, is the wild card though for the short-term. I wonder if I stressed this enough by now. The above levels should be of assistance to monitor the short-term trend and update the market directional odds as we go forward. Please note that this is just my personal opinion based on a my review of the GOAX partners and the .S.O.M.A. indicators. I COULD BE ALL WRONG and my opinion is no better than yours. ALWAYS REMAIN ODDS FOR THE OTHER SIDE TO HAPPEN! Technical analysis is an art, not a science. Two experienced technicians might see different patterns on a chart and might arrive to completely different opinions.. Furthermore, technical analysis is a way to assess a situation at a precise moment and the conditions used to arrive at a conclusion or bias might totally change overnight. It requires updating to ensure the conditions remain the same and when a TA character change happens, it just up to us to salute the new bull or bear, change the bias and run with it. That simple. THIS 1/4/08 S.O.M.A. COULD BECOME OBSOLETE IN 2 HOURS DEPENDING ON THE EVER FLUCTUATING MARKET CONDITIONS AND TA CONDITIONS! I do not care being right or wrong. I am just assessing the directional odds based on the system I’ve been following which tracked the market pretty good over the last 18 months. But past performance is not a guide for future performance. THIS 1/4/08 S.O.M.A. COULD BE ALL WRONG! Do not trade based on any of the above unless you want to lose money, and go bald.
KEEP AN OPEN MIND,CUT THE WS NOISE OUT,THINK FOR YOURSELF, MAKE UP YOUR MIND, AND BEAT THE WS CROOKS!
All the best in 2008 and good luck! Best, Tom2oc
