Sand Spring Advisors LLC
Winter/Spring of False Starts
January 28, 2003
by, Barclay T. Leib
First - let me admit that I am travelling at present, and have not been able to devote my usual attention to this website, nor full attention to the markets. For this, I apologize, but the logistics of running both this site and a hedge fund allocation/consulting business are what they are.
While I have been on the road, one subscriber wrote to me wondering whether the break of 968.43 support has turned me bearish. Perhaps I am completely "out of synch" here, but while the recent decline surprised me a bit, and I only belatedly realized that the alignment of the Commitment of Traders Report was potentially concerning (small speculators having recently been max long while large speculators were max short)-- I cannot bring myself to want to sell the major equity indices at this time.
In a vaccuum, looking at the chart of the S&P, as well as such short favorites of mine such as Deere and Dell, I can certainly see the bearish case. But then my eye wanders to the euro, gold, and crude oil charts which are all now getting over-extended, and I can only conclude that this winter and early spring are more likely to be a period of "false starts."
We are currently experiencing a false "scare" lower, and as soon as March, I would anticipate that we may see a false "relief rally" higher. 972-973 remains a far more comfortable level for me to want to establish aggressive shorts. Much patience may be required before getting there.
What I have done in my own trading is to sell my few remaining gold shares (the 371-372 Fib target depicted below having been reached), and I also lightened up on some of my long energy stocks including Enerplus that subscribers will remember as having a Fib target near 19.50. We got close enough to that target yesterday at 18.99 that prudence suggests starting to take some profits.
Please forgive me if I end up missing "the big kahuna" crash of 2003, but I just don't see the markets set up for such an event at present. Seasonally, huge crash events in history also just don't tend to happen in the first calendar Quarter. Instead, if we can get a relief rally from around current levels (perhaps starting in earnest on or about the Feb. 5th Vyden Cycle date -- more on that cycle to come for subscribers soon) into our March 18th PEI cycle date, I believe that the June-July period will likely still hold a huge period of market stress. But its likely too obvious and too soon for this to happen right now. Much patience to put up with all these false starts is first warranted in the short-term.
Non-subscribers are invited to access our December 22nd article, "Various Perspectives on 2002 & Ongoing 2003 Concerns," together with other past articles, by signing up for a quarterly Sandspring.com subscription below.
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