The week ahead

The market seems to be setting up for a sell off....if we are setting up for the big one (which I believe will make the first sell of look like a whimper) I don't know. Mr Market has a way of ensuring only a select few benefit from its travails. If I I'm reading things correctly - the current opinion tends to a correction is required before the market steams ahead to the upside. Therefore playing contrarian: we are either continuing relentlessly upwards, decimating all Bears (are any left?) for say another 20% or we crash through all support to the downside and never see these highs again - at least for the foreseeable future.

Being the grumbly Bear I am, I lean towards the latter. I tend to feel those sitting long currently sleep at night with one eye open - if downside does start gathering momentum and your classic Fibonacci retracement levels are steamrolled (38.2%, 50% etc) - these guys will jump out faster than you can say "Desmond Tutu!"

Here is a close up of where we are - pevious support turned resistance (turncoat!) - classic technical analysis. The other bearish sign is the rising wedge - it has not quite gotten as tightly compacted as one would like - although beggar bears cant be choosers.

Here is a long term view of the ALSH - can anyone say parabolic!

Now if you were an investor pre when the crash happened and did see this chart would you not have felt ever so slightly queasy.... Kind of like climbing Kilimanjaro without properly acclimatizing and doing the mandatory "descents" to properly adjust to such rarefied atmosphere.

My view is quite obvious based on the above long term chart since 1960, this puppy got a bit carried away (kinda like our property market) and we are headed back to long term support currently sitting at ALSH 10500. Obviously the trend line rises over time and I can't see us dropping to 10500 over the next couple of days :) So more than likely finding support at the May 2002 high of 11665.

Bearish? You betcha. Everything goes through cycles and markets that have turned cyclically bearish tend to reach a bottom when there is no hope left and a general feeling of revulsion pervades. Think we are there yet? Not a chance.

Don't be fooled by bank Analysts, Portfolio Managers and CNBC or Summit - these people have it in there best interest for people to stay involved in the market - have you ever heard someone say SELL/get out the market while you can.....!!!

Will post updates as the week progresses. Keep your eye on the EURUSD as stated previously - short term support has been broken lets see how far the Buck rallies. Interestingly enough USDZAR has not broken resistance as yet and as a beta FX cross, USDZAR tends to lead EURUSD. Therefor the break might have been a false one... lets see how the week pans out.