Thursday, July 7, 2011

What's Up?

The Nasdaq Composite and Nasdaq 100 indexes as well as the DJ Transports all made new cyclical bull market highs today with the Transports closing at new all time highs.  The bears have been completely routed in the span of 3 weeks.  And yet the calls for an end to the rally continue.

I don't think so.  I also don't think the current rally will stand based on the lackluster volume.  We will probably see another selloff to reinvigorate the bearish sentiment.  As long as the March/June lows are not violated the next selloff will set up the best opportunities of the past year.

I don't think anyone really knows what the pattern or elliott wave count of the market is at the moment.  I see very few bearish looking stocks in the major indexes.  Most stocks have moved impulsively off of the June low.  This suggests that the current upmove is a first wave.  The next selloff or pullback will be a second wave setting up the most powerful move since last September.  Again, as long as the March/June lows are not violated.  And also again, the pattern of the correction since the February high is really anyone's guess at the moment.  I haven't seen a convincing argument.  The only thing that I am not convinced of is that a new bear market is around the corner.

No comments: