Oops......I think it's starting to matter!

As I've alluded to in the past "Hope is not a strategy".  The market has been bobbing and weaving for months fueled purely on "Hopium". Last week the reality, of the economic malaise we are in, was brought home by the dismal employment situation which the BLS can no longer hide in make believe numbers. The Government has been putting lipstick on a "pig" and people are coming to the realization that they are being lied to.
Next week may see an early bounce due to the following:

• There is a full moon on Monday at 7:00 am and after which the markets tend to rise 70% of the time.
• China is hinting at adding liquidity to its markets.
• Japan may have already started the liquidity pumps flowing.
• The FED will be speaking all week long and there are plenty of opportunities to mention QE3 is coming.
• There are signs of an oversold condition which would require a bounce to alleviate.

Like any time frame in investing, the markets go up and down. Let's take a look at the longer term to try and anticipate where we are going.

Even though we had a miserable day on Friday, the VIX (lower window on the chart) really didn't jump as high as it would normally be expected to with such bad news. This likely means we might just see a bounce come Monday unless the news out of Europe is very bad. The VIX is above the 25 level but is far from the 40-70 level seen at past bottoms. So even if we get a bounce, the near term direction appears to be down.

Here's my previously presented 2012 forecast chart. All three (3) attempts to foresee the future of the markets have us moving towards a mid summer low of some sort. Right now we are looking at 1160-1150.

Updating the forecast through Friday the 1st, you can see that we are moving right along the plan and heading lower.

I've added the 1292 "line in the sand" for the SP500. Notice we broke through that level and it will now act as resistance going forward.

When this chart is posted most people want to pretend that the U.S. markets could never spend the next 10 years drifting lower like Japan. That is the true definition of "Hopium". Look at the past 10 and then the potential for the next 10. Scary!


You need to prepare yourself for the potential of this scenario coming to fruition.





The chart below should be familiar to you if you have spent any time at the site. It's the monthly SP500 and the green arrow on the chart tells you exactly where to expect the markets to make the next major bottom.
Sadly the number is near 600 on the SP and 5000 on the Dow Industrials. The indicators are just beginning to roll over so we lack final confirmation but I wouldn't wait until we get all the I's dotted and T's crossed before you safeguard your portfolio. CASH is good!