Tuesday Feb 29, 2012
The market continues to ignore the reliable indicators that are flashing caution. The summation index falls,the Transports fall with higher oil prices suggesting Dow Theory problems, insiders are selling as fast as they can, these are all realiable signals, but the market frustrates as stocks and gold push higher.
Well, the market did the same thing in February March of 2010 and 2011, it rallied in good fashion, finally pulled back in March, and then made new seasonal highs around tax time. Let's look.
See the pattern? Seasonally markets make fall lows. They did that in 2009 nad 2010. Then the initial rally extended along th green line into the early part of the next year. The pullbacks ended at the blue arrows we show. The markets then snapped back to new highs in another impressive rally.
NOte that each year the maarkets sell off more and thne rally move, volatility increases. The message is that is setting us up for an even larger point sell off even if it is the same percentage as last year. But that should be later. So, for now, here is the best road map I can furnish. Let me be clear, if the patterns of the last two years repeat, the market has a short term top, well shortly, a pull back, and then races to a higher high for the year.
Regrettably stockcharts and other services still lack the 'fast forward' feature we really need....
Like Wiley Coyote, the market is running over the cliff without the internal underpinnings to suport it but price is price. We can expect Wiley to fall to a supporting ledge, then scramble up and the chase should be on again.
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