Is the Luck of the Irish About to Run Out?

As one of the so-called "PIIGS" over in Euro-land, Ireland's stock market has held up better than the other countries that make up this acronym. However, I see fireworks to the downside likely starting soon in the land of Guinness beer. Here's a 17 month daily chart ($IEDOW) thru the close on 7-12-2010 with my thoughts:



Talk of excessive bearishness out in cyberspace makes me smile as I rely on charts and they show nothing of the sort from my perspective. I am glad to see many traders looking for a significantly bigger bounce from here. I added to short positions today. A reminder of what excessive bearishness looks like usually involves put to call ratios, as this defines what people are actually doing with their money. Here's a daily chart of the 5 day moving average for the equity put to call ratio ($CPCE) over the past 3 years of a cyclical bear market that I believe is not close to ending:



I hope the bulls are also cognizant of the fact that volume on this short-term rally has been anemic, particularly relative to the selling volume that preceded it. Today was the lowest daily volume for the S&P 500 and Dow since the week between Christmas and New Year's in 2009!

Still uber-bearish on global equities and still biased as I have large short positions on the S&P 500 and commercial real estate. If we go higher, I will be buying more puts. I am keeping my crash helmet on for now. The Dow to Gold ratio will reach 2 before this secular general stock bear market is over and we may well go below 1 this cycle.