Running Out Of Time

Volume continues to contract as the rally makes new closing highs, which suggests a turn is near at hand. However, if a meaningful decline is to get underway, it should do so soon. Although it does not occur frequently, sometimes a potential 10 month cycle low can become a point of acceleration. We are rapidly approaching the time frame when the 10 month cycle should bottom. My calculations show the 10 month cycle bottoming a little early, around 12/9 to 12/11, while traditional methods could put it as late as 1/9 to 1/12. We also have the typically bullish Thanksgiving holiday period coming up next week. If we do not see a sustained decline into these dates, we may need to consider the possibility of an acceleration move.

Last year the markets bottomed on 11/21/08 and topped on 1/6/09. Will we see a reversal of these turn dates with a top at the end of this week and a bottom on 1/6/10? That is certainly a viable outcome. If, on the other hand, markets begin to consolidate next week rather than decline in earnest, the bearish near term case would be severely compromised.