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CNBC Europe

LET'S LOOK AT THE S&P 500 WEEKLY CHART

Since the March low I have been saying this move up would be the exhaustion leg to this bull campaign. That meant that it needed to be a vertical move up and would last approximately 90 calendar days and run approximately 15% up from that low. That is 12 more trading days and adding anther 20 to 30 points to the move. Yesterday we saw the largest daily move down since the counter trend start in March. This move down is likely starting a little distribution pattern and we'll cap this bull trend off with a final multi day move up above this current high and appear to show the S&P breaking above it's 2000 top, The only thing missing from a top is consensus (more bulls) and a break out above that level will fulfill all the previous requirements I've set up. If I'm correct we'll see the index come down to marginally break the price of the February high and rally into a secondary high at the end of July, then trend down to a level just above the 1200 price level by late October.

NOW LET'S LOOK AT THE LONG T-BOND MONTHLY CHART

You can see there were three thrusts up since the January 2000 low and the last leg of that advance subdivided into three thrusts also which is a classic Elliott Wave completed wave structure. This completed a 24 year bull trend in bonds and as I said last year interest rates are going to be moving higher for the next 20 years. This is a huge market and a top would take time to form and that is the current process. This is now a lower high or secondary high in place.

NOW LET'S LOOK AT A DAILY CHART

If you want to see something that could ruin the party in stocks, interest rates could be it. This chart is daily and shows the secondary high. You can see the last move up was 16 trading days and within half the time or 7 days it was back where the 16 day rally started and is now testing an "obvious" low and could give a bounce. If the bounce is weak, then the long bond will be testing the 2006 lows. The best it will do is show a lower double top against this year's previous high. Interest rates are going up the next 20 years.

LET'S TAKE A QUICK LOOK AT THE EUROPEAN STOCK INDEXES

The DAX INDEX is exhausting just as are the US Stock Indexes. The European stock indexes can be running out the same cycles. Historically the last three months of an exhaustion in the DAX is between 12% and 17% and runs 72, 90 or 135 calendar days. The index is now 72 days and 12%. The top could be within a few weeks and 300 points at the extreme. Time is running out on these bull campaigns.

 

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