The ZenTrends "Markets are Going to Collapse" Newsletter

Its the end of the world as we know it.....

Following the Fed announcement on interest rates today markets reversed lower from all-time highs. It looks like we are headed for a correction. Just how deep? Nobody knows, but it will likely be painful...bet on that.

They are pitching bearish newsletter commercials on financial networks today, so I figured I better get on board for this wave of hot opportunity!

Here is the SP500 Weekly chart, take a look at some of these Fib levels for a little perspective of the doom we could see:

Pullbacks within "normal" boundaries can retrace 50%-61.8% of the prior trend. If this is to play out the levels of note are about 2,650 and 2,580 respectively...What will that do to your 200% Margin account? Death likely.

Probably my favorite bearish chart pattern is the "rising wedge":

Unfortunately I can't make this look like its failing yet, but you get the idea. When it breaks, oh boy we are gonna get smoked.

I've noted some other classic risk-off rotation that has begun to kick in as of the last couple weeks:

TLT has rotated up on the Weekly chart from a very orderly Bull Flag pattern

It seems money is rotating into Bonds and that tends to be a sign that investors are expecting some riskier action ahead.

I also note the new 52-week highs the US Dollar posted last week

Generally movement into the Dollar is a sign of protection-seeking rotation of funds. Its seems participants were anticipating some problems ahead with this recent strength we have seen. At the very least this should be a headwind to the internationally focused Mega-Cap companies in the SP500.

Ok so I've been a bit of an alarmist above. Maybe context doesn't come through on the text like it does in my head...In all seriousness, would a pullback really surprise anyone? The market is up 25% from the December low over the last 19-weeks; its been an absolutely torrid run.

What I am expecting is for the "air" from price to the 20 Week SMA to be filled in. This should create a Bull Flag-like pattern. Currently the 20 Week SMA is about 6.5% below the market.

I would view a consolidation like this to be a very bullish development. It would allow price to reset to the rising moving average and establish a new higher low or floor of support. The current move up has not paused long enough to create any viable support, price will need to discover some demand over the next several weeks, likely near the 2,800 level is my best guess.

A pullback from current levels would not be a disaster, well it could be a disaster for those who are leveraged to the hilt and not in any way prepared for lower prices however. I have been holding some fairly significant TLT positions waiting for prices to form a higher low. Its ok to be long stocks on this pullback, but its prudent to maintain some balance to take advantage of any potential weakness that may come in the weeks ahead.

For those who are about to die, I salute you...For everyone else, I'll see you tomorrow