Sunday, March 7, 2010

Inversion?


I have noticed over the years that markets tend to turn at points that are in sympathy with the markets turning points one year earlier. This is known as the solar return cycle. However, it doesn't say anything about market direction. Oftentimes, we will see that the turning points are highly correlated and then suddenly they will become inversely correlated. Looking back at the first quarter of 2009, we see there was a high around the first of January followed by low in mid-January, a high in early February and a low in early March. This year, we have two highs in January followed by a low in early February. Will we see high in early March?

Note that the momentum oscillators are holding below previous peaks as the Qs have come within ticks of a new yearly high.

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