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Here’s Why This Will Be “The Rally that Fools the Majority”

At the beginning of most great bear markets, there’s invariably a big rally that convinces most that the bull market is still running. Then the market tops out a little below or above the last market peak, rolls over, and proceeds to drop in a series of stairsteps that lasts from 12 to 30 months.

Those are real, grinding bear markets. We haven’t had one of this since 2007-09, because every time one threatened, the Fed intervened to re tilt the playing field. It probably can’t do that this time, because of the entrenched high inflation.

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Joe Granville called that last rally, “the rally that fools the majority.” There are signs that this could turn into just that. I’ve been posting long side trades for a couple of weeks. It looks as though we can stay with them xxxx xxxx (subscriber version). Xxxx xxxx xxxx xx xxxxx reverse that strategy.

Cycles –   The 6 month cycle has clearly entered an up phase, ideally due to top out xxxx xxxx (subscriber version).

In that context, up phases in shorter cycles should continue xxxx xxx xxx xxxx (subscriber version) next few days. The 13 week cycle high is ideally due by xxxx xxx at a projection of xxxx. But its indicators are positioned for an extended up phase, so I wouldn’t marry that xxxx xx date.

6-8 week cycles are due to peak xxxx xxx xxx with a projection range of xxxx-xxxx. The 4 week cycle is ideally projected to top xxxx xx xxx  in the xxxx-xxx area.

Third Rail Chart –  The lower line of the wider meltup channel starts the week at xxx on Monday and rises to xxxx on Friday. The meltup will remain intact for as long as that line remains unbroken.

Intermediate trend downtrending resistance starts the week at xxxx and descends to xxxx on Friday. If cleared, the SPX will then target apparent resistance around xxxx.

Long Term Weekly- For now, I must assume that this is a bear market rally. But if it clears the long term trendline around xxxx this week, that view could change. That would call for a tactical adjustment in trading.

Monthly Chart – The mid March rebound has formed another equal width uptrend channel. Its lower line is around xxxx in March and xxxx in April. Resistance is around xxxx in March and xxxx in April.

Cycle Screening Measures The cycle screening aggregate stayed pinned at a high level all week. This remains bullish for both the short term and intermediate market trend.

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These reports are not investment advice. They are for informational purposes, intended for an audience of investment and trading professionals, and other experienced investors and traders. Chart pick performance changes week to week and past performance may not indicate future results, as you know. Trading involves risk, and these reports assume that you understand those risks and manage them according to your tolerance. 

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