It appears that there are several different investment "camps" these days. So far, I have been able to identify three primary divisions.

Camp Sunshine

On one side there is "Camp Sunshine." At Camp Sunshine the residents believe that the worst of what was wrought in 2008 and early 2009 is now over. The prevalent story line here is that the 50% rally seen in the stock market since March is a sign that the economy has or will soon bottom out. Here the residents will argue that the massive explosion of fear that accompanied the devastating declines of October 2008 and the plunge into the March 2009 low was more than enough to "clear the decks" and set the stage for better things to come.

The Camp Sunshine crowd is an eclectic mix, including:

a) People who are optimistic that President Obama will ultimately deliver on his campaign promises (or if you don't like those, "I got other promises") and actually deliver positive "change" and therefore feel that there is "hope" for the country on that basis.

b) People who have attended Town Hall meetings recently and are still trying to get the veins in their foreheads to recede (by the way, my "Have You Yelled at Your Congressman Lately" t-shirt business is going gangbusters here). These people are optimistic that President Obama will not deliver on his campaign promises and therefore feel that there is "hope" for the country on that basis.

Like I said, it's an eclectic mix. Let's just hope to heck they don't start talking politics over at Camp Sunshine anytime soon. In any event, at the moment things are looking pretty good for the Camp Sunshine Crowd (in the immortal words of Allen Sherman, "guys are swimming, guys are sailing, playing baseball, gee that's better").

At another camp just across the way, things are not so happy.

Camp Just You Wait

At "Camp Just You Wait" the mood is much darker. The crowd at CJYW is certain that things will soon implode and they stubbornly refuse to listen to the possibility of good news. Every uptick in the Dow hits them like a ball peen hammer to the side of the head. "Just you wait" they mutter over and over - and not just simply to remind themselves where they are. These people will not be "happy" until the next Great Depression is in full bloom, at which point they will state triumphantly and with great self satisfaction, a resounding "I told you so." Then they will go off and look for food. Yes, it's a fun crowd over at Camp Just You Wait (fortunately for me I have superior marketing skill and have taken a different approach here. I've sold out two shipments of "The End is Near" t-shirts with another shipment on back order).

So clearly we are living in interesting times.

As for myself, I have pitched a tent away from both of these camps. I and a few other loosely associated individuals have set up a third camp, unofficially known as "Camp Go With the Flow."

Camp Go With the Flow

Sure the guy over there eating the alfalfa sprouts is scaring me a bit, but by and large the mood here at CGWF is light as we don't subscribe to a hard and fast, unbending ideological view of the world. Also we hate politics (almost as much as we hate politicians) and our primary interest is in the financial markets. In our view, if the Dow wants to keep rallying without stopping until it reaches 30,000, we're OK with that. At the same time, if the market starts to roll over and break down, we here at Camp Go With the Flow are prepared to, well, go with the flow, what else. If things do head south we will be the first ones heading for the exits and examining ways to profit from the short side of things.

So what is the consensus view here at CGWF? Sorry folks, we don't have one. Too much conflicting information. For example:

• For the Bulls see my article from August 5, 2009, When "Getting Cross" is a Good Thing.
• For the Bears see my article from July 29, 2009,  If Past is Prologue (Then Look Out Below).

Take your pick. Also, don't set your tent up too close to mine. And if you find a power outlet out here somewhere let me know, because my laptop is about to die.

A Slightly Bearish Peak into the Months Ahead

While my CGWF comrades and I are comfortable "riding the market wave" there are a few signs on the horizon that are causing us a bit of angst. Charts 1 and 2 display the Elliot Wave counts for the Dow Jones Industrials Average on a weekly and daily basis, respectively.

 

Chart 1 - Weekly Elliot Wave for Dow Jones Industrials Average
click here for larger view

In Chart 1, we see that on a weekly basis, the Dow may be wrapping up a Wave 4 rally. And let's just say that the price projection is not going to go over real well over at "Camp Sunshine" (although it is causing great joy - such as it is - over a "Camp Just You Wait").

 

Chart 2 - Daily Elliot Wave for Dow Jones Industrials Average

In Chart 2, we see that on a daily basis, the Dow has reached its target area for the latest Wave 4 advance and may now be setting up a Wave 5 top.

Now truth be told, we at Camp Go With The Flow are not all ardent Elliottheads. In fact, it can be argued that "going with the flow" is not very congruent with a doctrine that avers that everything in life - but especially the stock market - moves in five waves: three up and two down or three down and two up. So we are not presently too alarmed about the information displayed in Charts 1 and 2 (although I do have a handful of "The End is Near" t-shirts stashed away just in case). We will nevertheless be keeping a close eye on how these two charts progress (assuming of course that we can find an outlet to keep our computers running).

One other ominous note, which I will talk about more in the weeks ahead, is the fact that September has by far been the worst performing month for the Dow over the past century.

In Sum

Let me be brutally honest here. While I am admittedly not very good at "predicting" things in normal times - hence the reason I also keep a tent pitched year round at Camp Systematic Traders - I cannot think of a time in the past when I have had less of a "feel" for what is coming next. The fact of the matter is that if someone wants to make a strong bullish case or a strong bearish case, there is plenty of ammunition available on either side. Also, with all of the developments on the political side of things there is great uncertainty as to just how things will ultimately work out in the end. So I think I will remain comfortable here at "Camp Go With the Flow" for a while. I think I'll just sit back and enjoy a good book.

Now where did I put that copy of Market Wizards?

Jay Kaeppel
Staff Writer and Author of Seasonal Stock Market Trends
Optionetics.com ~ Your Options Education Site

Questions for Jay? Please visit "Ask the Traders" through the discussion board on the Optionetics.com home page.

NOTES: 

To learn more about Seasonal Stock Market Trends: The Definitive Guide to Calendar-Based Stock Market Investing, please click here.