Yesterday we talked about the negative side of the current market and why 1320 on the S&P 500 is so important to the intermediate and long term viability of equities.
This still remains the case mind you and that level on the S&P 500 continues to remain an area of concern and bears a keen eye in order to keep all avenues open.
However, as you know, I remain one of the few that continue to believe we are NOT in a bear market and this decline we have seen in equity prices, while painful, is nothing more than a normal correction in an ongoing bull market.
Remember, all of these market pundits that are crying wolf now are the same ones who have been echoing caution over the last 2 years. These are the same market analysts that talked about how long it had been since the market saw a meaningful correction of 10% or more and how just this type of correction would be healthy for the long term viability of equity prices.
Well now they have gotten their 10% plus market correction that they had been looking for and all of a sudden it no longer is healthy for the market, but quite the contrary. Now it has become the starting of a bear market instead of a normal correction in a bull market.
Seriously, I don't know how they can do it. They look for something to happen for two years and remain in a limited equity position during the entire time and then the market finally does what they have been saying it would do and all of a sudden they change their minds on what it means.
You can see now why I do all of this analysis myself and I only use the mass of analysis from others as a contrarian indicator at best.
Anyway, I have attached a chart of the NASDAQ that shows quite a large wedge forming on the 30 minute chart. This wedge has some fairly major implications for prices if it breaks out to the upside. The minimum target is for a better than 12% rally to be ripped off and probably in fairly short order.
So while we continue to monitor that S&P level 1320 we also remain in a buy weakness mode and until anything tells us differently then this is the strategy we continue to use.