Bear Cycle to follow Bull Cycle in 2013

From 1990 to 1997, Kevin Haggerty served as Senior Vice President for Equity Trading at Fidelity Capital Markets, Boston, a division of Fidelity Investments. He was responsible for all U.S. institutional Listed, OTC and Option trading in addition to all major Exchange Floor Executions. For a free trial to Kevin’s Daily Trading Report, please click here.

Commentary for 1/07/13

It has been eight trading days since the last commentary, and we now have what is a very negative Fiscal Policy deal as we start 2013, in which the SPX finished +13.4% but very few active managers and hedge funds did as well as the central bank manipulated SPX market index.

The SPX was S/T-O/B on 12/20 following the 1448 high [12/18], and the +7.9% advance from 1343.35. The 4 MA`s of the VR and BR were 69 and 65 as the SPX closed at 1443.69 on 12/20. There was also a 5 RSI momentum negative divergence at the 1448 high.

The Index declined -3.4% from 1448 to 1398.11 in 8 days, and was red 5 straight days into the 12/28 1402.49 close, finishing the week -1.9%. The SPX was +4.6% last week as it was +1.7% on 12/31, and vertical on 1/2 at +2.5%. The Index finished Friday at a new cycle closing high of 1466.47 versus 1465.77 on 9/14/12, with a 1467.94 intraday high versus the 9/14/12 cycle 1474.51 intraday high.

The market is obviously S/T-O/B with the 4 MA`s of the VR and BR at 80 and 77 after the 4 day spike. The 4th QTR earnings season starts with significantly reduced estimates by the companies, followed by the “me too” analysts who are for the most part partners with the companies as they manipulate their ‘earnings expectations game/deception”. That is followed by the “better than expected” media hype to try and keep the “game” going in the US Zimbabwe market.

The BLS will continue to put out their manipulated numbers, which are always changed to keep the “people” thinking all is well with the economy. Clinton revised the calculations as did Bush, and now Obama does the same, but to a greater extent because he had the “Panic of 2008” and that is obviously a much bigger burden to overcome, so he has to fool most of the people all of the time trying to keep them positive [not necessarily a bad thing] with the significantly biased media support.

The Central Bank is doing its best to manipulate the market higher, and they have, but in the end, the Fed can only delay the inevitable next bear market decline within the current secular bear market. The SPX has had a great run at +121%, and it would be no surprise if it takes out the 1576 high, which is only +7.5% from the 1466.47 close, and that will put the SPX in an all-time monthly RST sell zone.

There is some Fibonacci Time symmetry of note in the second part February, and then the significant Pi symmetry in June and early August so stay tuned as the odds favor a significant equity bear cycle starting in 2013, and not a mass exodus from bonds to the equity market after a +121% bull cycle advance within a secular bear market that started in 2000.

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