« The war between Google and Yahoo Finance, Fri., May 19, 2006, 6:33 AM | Main | What's new at Yahoo Finance, Fri., May 19, 2006, 7:19 AM »

May 19, 2006

The most shocking week since 2000, Fri., May 19, 2006, 7:07 AM

Market prices have been more volatile than any time since 2000. It is an agonizing time. A week ago I called it "Estacada, the Death of the Bull".

I wrote in last weekend's Week in Review, right from the top: "I think we're going through that (Estacada) process now. Pray that the Bear is ruthless and fast".

This morning, when I turned on Financial Entertainment Television, the first words I heard from a European trader were: "This week has been a total shock!"

But then I knew it would be, right?

I have nothing to sell; I just trade prices. I am free to see what is happening in markets.

That is the key.

A week ago I wrote that the market would frighten many people this week. It has.

Today the Bull will make an effort to fight back. But the trend has turned. The inevitability of price declines will soon dawn on all capital owners around the world.

Market prices will now go through a series of lower highs and lower lows until the owners and managers of capital decide that our trading risk is in balance with the rewards that are potentially ahead for us.

Posted by Posted by Bill Cara on May 19, 2006 07:07:30 AM | Category: Cara Today in the Market

Discourse

Bill,
You had also mentioned last week that this week could see a mega-drop in the stock market, i.e., drawing parallels to the 1987 crash. Do you still see something like this happening?

Posted by: smess [TypeKey Profile Page] at May 19, 2006 8:13 AM [link]

smess,

I called this situation a process, which takes time to unfold.

The Distribution Zone was the peak of the cycle. I pointed out to readers that equity markets have been going through that for six months. During this period, the Gnomes have pumped and dumped their way through what is called sector rotation. They have now pretty much completed their plan, and the next phase has commenced.

The equity market is now in the process of Decline. I hope the scenario unfolds in a way that you call a "mega-drop", but the market has to speak before we can hear. A "mega-drop" however would take us rapidly to an Accumulation Zone. Nobody wants to be dragged through a 2000-2002 long drawn-out affair.

Posted by: Bill Cara [TypeKey Profile Page] at May 19, 2006 8:31 AM [link]