Either the indexes will bump up again to right where they were before and then make a nasty 10% correction down to the trend line or they break through the upper trend line and create a new run. The healthiest action would be for the indexes to make the nasty correction. However, I believe it most likely to break into a new trend. Right now, there are fears of a recession, but what if the recession never comes? It will result in a nice bump. Im making this call right now. By year end, Nasdaq 3000. 2007 will be the best year yet. 500-600 point run out of the Nasdaq. If the market does break into a new trend, then this will be cause for concern as it will form a nice B.A.R.F.
There is a trend line for the DJIA that runs from the early 80s the present time. That trend was violated somewhere around 2002-2003. I dont have my master charts in front of me so I cant tell you the exact dates. This trend line is very strong and requires a lot of power to break. The 1987 crash couldnt break it. One reason for the market correction in February and in May 2006 was because the DJIA was having trouble getting over the macro trend line. The chart is now set up in such a way that its going to ram right through it. If not, then it will be another correction. The Wilshire 5000 becomes in dangerous territory everytime it gets about 8% over the trend line that was started back in 2004. Right now its 9% over the trend line and will be brushing up against the upper part of the channel shortly. Judging by the sentiment indicators and that huge cup-handle formation, Im betting this will ram right through the upper part. When we ram through the roof, then its going to form a new upwards momentum not seen before since 1999. This will become a dangerous bump that will eventually breakdown. Probably sometime in 2009-2010. A new B.A.R.F. As for the catalyst, its useless to pay attention to fundamentals. That will just take your attention away from the chart.
the trendline that seems significant to me is the one starting in april 2003. It converges with the 50% fib line (starting with the july 2006 rally ). Strictly T/A speaking this market wants to come back to the 11800 range before continuing upwards. If Im going to play Nostrodamus I would say we will hit 11800 middle of May.
The major indexes are diven by a combination of fundementals and technicals. Strong fundementals will drive the nasdaq to 3000 in a year or two. However, at a critical point the 'herd' will begin to pile into the markets to chase higher gains which will begin the trasition from a fundementals driven markets to a technical driven one. The final result is a massive parabolic rally from 3000 to 7000-9000 which will collapse in a similar manner in 2000-02.
You post a lot..and generally you speak as if what you say are facts. Now you could be right..you could be wrong...none of us really know whats going to happen or we'd be billionaires. But Im curious.. what are your credentials ? Whats your experience in the market ? Just so I dont seem like a hypocrit heres mine. - Didnt go to college so cant claim anything there. - Been trading since around '97. Im no expert but Ive been through the bubbles and bursts and not just read about them. - Not going to claim to make hundreds of percent returns a year.. but Ive always beat the market. - I dont do this for a living. Its always been a hobby. Chart-wise, the markets current incline seems healthy..nice uptrend but not too steep. A decent correction once per year. I hope it continues this way ( which is why Im hoping for and betting on a continuation of this drop ). Im not a permabear in any way...but I like to see balance in the world. As you said..if the market starts a new upleg it will be at a much steeper advance which is very unhealthy and only leads to major drops like we saw in 2000. In the late 90s we had the tech boom which fueled that crazy climb.. I dont see anything right now that is comparable enough to fuel a steeper advance. Thoughts ?
Will you let us know when the parabolic rally whereby the Naz runs from its current value to 7000-9000 begins? I'm not kidding. Post something indicating when you think it has broken out. Thanks.