Comments in this blog refer to my charts collection found at
For intra-week comments go there, updated more frequently.

Saturday, March 19, 2011

Spring Roll- Seasonal Forecast

Current picture.

The March correction had come on schedule and could had run its course already with the Ides of March mini-panic. Retesting of the March 16th low is likely, but  the worse near-term scenario I am expecting now is marginal new low around 1240, where the 62% retracement of the prior same-degree upward move is, with divergences showing up on the oscillators.
 Russel 2000 came right up to the resistance zone in the area of the prior bull market top and is correcting in order to gather a momentum to punch through that resistance into new all-time highs on the next wave up.

Gold has been remarkably steady running in 5-months spurts, interrupted only briefly for mild corrections. If this regularity continues, the current run should carry till the scheduled end of QE2 in June.

Dollar has just suffered a major breakdown and should not undertake any major rally until finds its support around 70-71 where it becomes a conundrum to watch. There are plenty of dollar charts in my list so I will save some server space here.
Oil has become a loose cannon thanks to the Middle-East turmoil, but the safe bet is that it will reach $147 sometime this year.
Natural gas is interesting and appears to be at the beginning of an uptrend (again, plenty charts in my charts list).

Spring vista.

There are some obvious headwinds but markets have been behaving remarkably well. The cyclical bull market that commenced 2 years ago remains in force and appears to have still few power bars left.
The pattern of ABC wave apparent in 1970s cyclical bulls is being followed quite faithfully. If that continues, the top should not arrive until September/October of this year.
The favorable seasonality  and monetary stimulus should continue to propel this market higher until the end of May, but a serious correction  may not  begin in earnest until July, with expectations for the small caps to underperform significantly after May.

No comments:

Post a Comment