This is a sequel to this post. We are trying to "paint" the future directions of the market. There are quite a few people skeptical that 1000 will be exceeded soon (us included). However, we need to look at this objectively. The rally from the lows has unfolded as we called out in that post.
To put things into perspective timewise, we had a decline for over 420 days, we have now been rallying for less than a 100. The long term chart just doesn't look complete timewise i.e we have need to spend some more months here or higher (Lets say DOW 11000 before June 2010).
Ofcourse, this is purely speculative on our part. Our cycle model and studies only point to a high in the first week of aug and a low on oct 20th or so. We have pointed out that in the chart above
In terms of price advance it will be a suboptimal advance. But timewise, it should drive sentiment high enough that people forget about the crash of 2008 and the govt. label its efforts a success. In general, people are still quite negative. Quite a few message boards and stock sites are humming with talks of P3 (elliott wave 3). We just don't think it will be that simple, either for the bulls or the bears. We could have a slow arduous grind up - imagine the days of old - 150 dow points for over 10 months. Well the previous week is a glimpse. As we have maintained, bear markets are designed to break down speculation. There were a lot of people in the 90-2000s who were enamored with stocks(us included). This is essentially unproductive. Such periods of going nowhere are necessary to kill the love. Fundamentally, the trillions of liquidity will surely buy us some time. Last week we had one such period. We had a similar period from Nov 08 - Jan09. We may just have a bigger one beginning the end of the year to mid 2010.
No comments:
Post a Comment