This morning's action raises the odds that the recent November low was wave X of (X), and the market is now headed higher in wave Y of (X) toward a retest of the 2011 highs. However, resistance at the median line and the March and June lows must be overcome first. Since the March and June lows were already penetrated during the October rally, the resistance should be week. Even so, the median line should repel the advance initially, and we should not expect the form of the rally to necessarily mirror the October rally. A pullback would be a welcome opportunity for a long entry.
2 comments:
From a technical perspective things look quite good and I personally am especially pleased as I initiated a 2X DOW Long mid-day yesterday. However, longer-term, liquidity alone will not solve the problems of the Euro zone. Substantial structural reforms still need to take place, and the ECB will need to decide whether to support the bonds of the Club Med countries. For now though, the path of least resistance is up and I could easily see a 12,500 or above reached, at which point I'll likely scale out of my position.
I agree that structural reforms that will support a secular bull market have not yet been implemented, and may not be for years. Yet, we have to deal with the market we have if we want to participate in it.
Good job on going long yesterday.
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