Greetings,
 Sunday afternoon, after watching the two prominent football franchises in Florida, Tampa and Miami, get their respective butts kicked I decided to work on a newsletter. Based upon their performance (Buc's and Dolphins), it could be a long season for both. Fortunately, for both Miami and Tampa, no matter how lousy they play this year they may still end up with a SuperBowl trophy.
Hows that you ask? Well, our current administration is focused on spreading good tidings to all. Sharing the wealth is the new theme of hope and change and that applies to all fields of endeavor including the NFL. Click here for details. http://www.kwikpop.net/NFL.pdf.

It's already been a long season for the bulls and bargain hunters that bought the March -April lows in the stock market.

 This rally is getting all markets quite overextended. That doesn't mean that the DOW can't hit 10,000, or higher, or the S+P 500 hit 1,100.

In fact, that is a very distinct possibility given the chart patterns we now have. SPY broke out to new highs (above short term resistance) on Thursday and Friday last week.
Since it managed to stay up here by the end of Monday it could actually move higher throughout the week.


chart (185 minute KP chart of SPY)

The daily chart of SPY also broke out to new highs for this rally. As you can see from that chart, it wouldn't take a whole lot of effort for the SPY to trade up to 110 from here. That would put us in the area of a complete 50% retracement off the March lows. Obviously this market is waaaay overbought right now.
chart ( daily KP chart of SPY)

We are all amazed at the strength of this rebound during the worst recession of the last 70 years. Recently, numbers came out on average wages from 1998 through 2008. Wages today are about the same as they were 10 years ago. I don't know about your grocery store, but where I live the cost of food is nowhere close to the prices of 1998. Everything (pricewise) has shot up dramatically over the last ten years. Food, fuel, autos, taxes, insurance and on and on.


If wages are locked into 1998 time zones and prices are still increasing in 2009 terms then consumers are facing some big battles in order to maintain the 'yuppie' life style we all bought into 10 years ago. The use of home equity as an ATM died off in 2005-2007.

Shrinking employment numbers are now forcing prime mortgages into default and consumers cut spending by 20 $Billion over the last reporting period in order to trim debt service and hold on to what they have already. Adding insult to injury, current plans for Cap and Trade and proposed modifications to the health care system create another subtle tax on business and consumers that could lead to additional cutbacks on employment over the next 2 years.

We need to change the health care system and we need to cure our addiction to foriegn oil, but simple logic dictates that we must first focus on the economy and getting people back to work, getting tax revenues back up and then we can hit people with all of these exotic changes and tax increases. People are willing to pay up a little more for various government agendas ... if they have a job and income to work with!

That's not the case today with double digit unemployment, a collapse in the housing market and consumers, grossly overleveraged with credit, trying to exist on 1998 income in a 2009 price environment. Somethings got to give and I think it will be the stock market. The economy is not nearly as strong as the stock market assumes and I am convinced that we'll have one more dip in the stock market before a confirmed bottom is in place. I'm looking for a W bottom or a lazy W like we saw in 2003. NATURALLY, I COULD BE TOTALLY WRONG AS I'VE BEEN MANY TIMES BEFORE!
The weekly chart of the DOW from 2003 above is a likely pattern.

I am going to start building an aggressive short position on the S+P 500 this week using a combination of ETF's, and eventually stock options on ETF's. If the correction gets serious I'll add short futures positions as well.

PUT YOUR MONEY WHERE YOUR MOUTH IS WDH!
OK, here is how I'm playing my bet. Click here for the PDF. http://www.kwikpop.net/strategy.pdf

Please note that the PDF is my personal strategy and is not a recommendation to buy or sell any securities or futures contracts or options or used cars or baseball cards! I'm merely sharing a strategy I plan on executing when the KPVMD DOTS and momentum oscillators confirm the trade.

In our next update we'll have a video on creating price channels using KP PIVOT 2

Regards,
WDH