Wednesday, December 7, 2011

Is The Pullback Over?

The Qs came within a few cents of tagging the 12ema today with just crossed above the 50ema forming a bullish hammer.  The pullback may be over already, but it is premature to make that call.  It is more likely that we will see a small rally and another decline first to create a larger 3 wave pullback.

The presidential cycle is calling for a rally into the end of the year and into the first of January.  Thereafter a multimonth decline should follow into May and a major rally into the end of 2012.  This scenario fits with the combination correction pattern that appears to be playing out right now.  It also fits with the typical 2 year rally  - 1 year correction - 2 year rally pattern that Gann described.  We are in the middle of the 1 year corrective pattern right now.  Whether or not a 2 year rally follows remains to be seen, but it will be probably be more than most are expecting.

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