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Market Sentiment At Its Lowest In 10 Months

Market Sentiment At Its Lowest In 10 Months

Stocks sold off last week…

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Stock Market: CNBC Report


Last week I indicated the world stock indexes looked good for a move up and a few should be exhaustion moves.


Last week I said the index was finally going into the exhaustion phase of this trend. Understanding that most highs come in through exhausting the buyers this move up was a strong probability. You can see how the two previous legs of this trend exhausted with sharp moves upward. It is obvious this past week started or possibly even completed this process.


It is easy to see the vertical nature of this advance the past week. This will exhaust into a high and complete the leg up. I don't have a strong time cycle to help us find the end through "TIME" and what would be the normal resistance has been temporarily breached so we are dealing with something unusual. This advance has also exceeded in price the other legs up and that is unusual for a final leg up. So there are some things technically that are abnormal about this trend. But since this is the exhaustion phase it needs to comply with fast trending criteria and should not correct back more that 4-days or the trend is complete. Once a market goes into an exhaustion phase, any sign of weakness will complete the trend and correcting more than four days should be the that signal.


Last week we were looking for the index to move up out of the low we forecast for the previous weekend and start the final exhaustion move up to complete this bull campaign. This must also comply with fast trend criteria or there is a problem with the trend. This cannot correct back more than 4 days at any time or the trend is over. If this is going to be a true exhaustion of classic proportions it will need to show a small sideways consolidation now rather than a counter trend down. A counter trend will still hold the up trend intact but a sideways or "flat" consolidation that takes only three or four days to complete would indicate a much stronger trend. There is a wild card here and I don't know the effect. But the 19th through the 21st of March has been very, very significant every year for the past 7 years. It is not usual for this index to find a vibration point and repeat it for years as was done with the October dates after 1987. I am assuming that one-year vibration is no longer dominant, next resistance is 1326.



When the index came off the bear campaign lows it moved up one year into high. It then moved down or consolidated the one-year move up with a one-year sideways pattern. A one-year consolidation is a very long time. Most consolidation of bull trends tends to be three or four months not twelve months and we viewed this as an extended period of accumulation and very bullish. The index then ran up and completed a leg up with a clear 5-wave structure and is now consolidating. This consolidation has maintained a bullish pattern with the last move being 9 days up, followed by 21 days down and staying well above the low that started the 9-day rally. IF the index can move up past Monday it should be at a new high by next week.


I've been saying copper still looks good for the past two weeks and let's see why. The move down after the last exhaustion has been weak and gone nowhere. There is a higher low that has symmetry with the previous low following a false break low. That is all quite bullish and is how a rounding bottom is formed. The move down is hardly measurable in relation to the trend. Friday the index showed a big Gap up and closed on the high as it went to new highs so it may have temporarily exhausted a bit but this fast up trend is still intact and holding a strong position.


Gold hit a top on a 90-day cycle as we had forecast and fell 9 days, in 9-days of rally it couldn't reach the high and fell sharply for 5 days. So in 5 days it took back 9 days of rally. That is a sign of weakness but nothing terminal at this point. It is now 5 days up from the low and not gone very far. The next in the time series that has been dominant in this index is March 21st and if it continues a weak rally into Tuesday we need to pay attention, as there could be more downside.

You can see the weekly chart is in an exhaustion mode of trend and shouldn't spend much time trading below the high and a lower high with downside follow through on the weekly chart would be an indication of completing the bull campaign.

The AUSTRALIAN ALL ORDINARIES INDEX still looks like a move up into April 19th that could bring in a top on that date.

If the US stock indexes can move past the 20th to 23rd it should also be in an exhaustion leg up. This time period of March 21st through 23rd has been the significant time period for each year the past 7 years, I am assume that vibration in time has run out and will not be important this year. Remember how October set up the same way after 1987. If fact October in 2007 will likely bring in a big down month.

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