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Saturday, October 6, 2012

Oct 6

The recent high and pullback has set the stage for some meaningful divergences on the Daily chart. Does this mean we are at a top now? NO. Does it mean we are *near* a top? MAYBE. These divergences typically take a few months to manifest and play out, and my observation is that we had a significant peak from which those divergences can START in September.

My thoughts right now are that we have a couple more months of the current rally left before a meaningful correction (Minor degree wave or higher). This also works with seasonality: October is typically one of the best months for the stock market (http://pragcap.com/october-the-jinx-month), I have serious doubts there will be any major pullback before the election, and then the market will be set up for a potential Santa Rally.

Of course none of that could happen, but if we are looking at odds and the lack of divergences in the current wave from a Daily standpoint, I say the strength still rests with the bulls right now.

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