Cascade Coming

After seeing the market for the past 2 weeks, I am convinced that we will eventually break 1020 and perhaps even get down to 950 this summer. A week ago, I was about 75% sure that we would get below 1020. Now I'm about 90% sure. The problem is where to get short. A good entry is essential to ride out the daily fluctuations before the market makes its real move lower. I was waiting for 1110-1115 to get short and the market didn't comply. I am begging now for one more short chance near 1100 to put down my bet and wait. We could bounce one more time to over 1100, before we cascade lower under 1020 and as far down as 950. Or we might not. 1120 and above are out of the question.

It takes time for investors to adjust to a new market. The shift from bull mode to bear mode hasn't been this swift since August 1998. It has happened so quickly that it has caught a lot of traders off guard. At first Europe was ignored. Now Europe is a factor, but still considered minor when it comes to affecting earnings of the S&P 500. When Europe is considered a significant factor in lower earnings estimates for the S&P 500, you will have that cascade lower. We are not yet there. But earnings come out next month, and the outlook for many companies will disappoint. China is slowing down quickly. Europe is going back to recession. The US is running on government fumes that is wearing off. The second derivative of GDP is now negative. The convergence of all these factors will lead to a selling cascade this month. Get ready.