It's Official: I'm a Teddy Bear, But the Markets are Still Growling!
Well I made another TV appearance in Asia. Today I was interviewed by Bloomberg TV about my views of the markets. As usual, I gave my typical bearish outlook for the current markets. At the end of the interview, the interviewer Bernard Lo said it's no wonder I am so bearish since I resemble a big cuddly teddy bear. I'm not sure I'll enjoy the moniker, but I am gathering the bear reputation. I can't help it. I am just reading the charts. I am neutral and simply try to interpret the markets as objectively as possible. That's what makes a good trader, put your biases aside and listen to what the markets are telling you. You can see the interview here. Keep in mind that many news sites don't keep their videos up for long, so if the link doesn't work in the following weeks, we'll try to get the video posted on the Online Trading Academy web site.
Looking at the charts, let's see my outlooks on certain markets. The first thing most ask me about is oil. It is in the forefront of everyone's mind. You have to remember, crude prices are not directly related to the equity markets. Just because oil prices are retreating, don't expect a major rally in stocks. We are not through the credit mess yet.
Crude is retreating to support. The support is at a 61.8% Fibonacci retracement that correlates with the 40 Week (200 day) moving average. I expect a rally here in price as winter demand will also rise. If that support should break, we have a very strong support formed by former resistance at $100. I do not see a break below that.
Moving to equities, the S&P 500 is returning to its bearish path. The charts show a bearish wedge. We saw the same formation in March through May of this year when investors mistakenly thought the markets were through the worst. We have already started moving down this week and since the last breakdown from the spring wedge brought us a 200+ point drop, we may see the same. I expect the S&P 500 to drop to the 1000 level.
Being a bear isn't all bad. There are plenty of opportunities out there if you know where to look. If you are unsure, be sure to visit your local Online Trading Academy location and take our classes. The professional instructors will teach you how to spot opportunity in nearly any market environment. Well, that's all from your "cuddly teddy bear" instructor Brandon. (Not sure if that's a good thing!)
Until next time, may your trades be green and your losses small!
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A member of the Market Technicians Association, the Chartered Financial Analyst Institute, and now holding the Chartered Market Technician Designation, Brandon has appeared as a guest on CNBC Asia's Cash Flow and conducted special seminars for CNBC staff on technical analysis. He has published articles in The Trader's Journal Magazine and was interviewed in Share Investor Magazine. Brandon was also an industry expert speaker at the Asia Traders and Investors Conference 2008. As a former stockbroker, brokerage trader, and hedge fund trader, Brandon brings various market views and insight to his trading classes and lectures. A wealth of knowledge, he has held NASD securities series 7 and 63 licenses. An Online Trading Academy graduate himself in 1998, Brandon has been trading equities, options, forex, and futures in his own account since.