12th Oct 2011–Pattern Study - My good friend, SPY and AMEN !

Ticker:

 

1. SPY

 

Topic:

 

1. My very GOOD friend Boon Leong called me and asked, "Will the market go up or down next?"

 

Lesson Learnt:

 

1. To be frank , I don't know. How I wish I know the answer.      ;-)
2. His question actually shows that I am not doing a very good job in my previous post on the SPY, DJIA and NASDAQ and maybe that is why he would like to give me a call for confirmation.
3. This time I took the effort to look at the 10 year monthly chart with only the 20MA line of SPY and see whether does it gives a single clue of where will we be heading to.
4. It is clear that during each bull market, when value retrace back to the 20MA line, it rebounds back up and continue the bull run (refer to all those green color arrows).
5. When bear market began, for example somewhere just before point "1" in the figure, the value punch through downward the 20MA line and then it will retrace back to point "1" (refer to the red arrow)before heading south and went much lower without looking back.
6. Take a look at point "2", did you see the similarity of it to point "1"? Look closer, this time the Bear came much steeper and stronger and the absolute low is lower than the previous low.
7. Now, we are point "3". Will this actually become point "3", you judge yourself. Did you see any similarity of this point to point "1" and point "2"? First, the high point around May is now much lower compare to the previous two high. Second, the SPY had punch through downward the 20MA line on Sept 2011 and now tracing back to the 20MA line (the right most red arrow).
8. So, will history repeat and make TODAY the day of point "3"????
9. If YES, how South and how low will we be actually going???
10. The chart hints that we could be all the way down to the range of 60~65 for SPY.  AMEN !!!!!

 

Intraday Chart

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Historical Chart