Sunday 9 December 2012
Trouble appears to be brewing for a weakening bull trend in stocks. Starting with the higher times frames,
which are more controlling over daily and intra day, those charts followed by most traders, we see a rising
wedge that is indicating a trend running out of demand effort. [A similar “wedge” situation was covered in
our post on “10 Year Note and Wheat – How To Find Trades, 2 December 2012, see Commentaries].
As swing highs 1 -4 show, the net upside gains are smaller and smaller, and what is important for the last one,
point 4, is WHERE it is struggling. At the end of 2007 and early 2008, price declined precipitously and wiped
out enormous amounts of market “value” and equity, much of which has not been recovered. Yes, the market
has since rallied, but most of it has come from central bank ramping, the public having abandoned the market
in droves, over a year ago.
The decline from the 2007 high to the early 2009 low took 17 months. The current rally is in its 45th month,
a high at month 42, taking well over twice as long to recover not quite all gains lost. Ease of movement down,
a labored recovery…not a good sign.
Even though price rallied above the March 2012 swing high, the horizontal line from…
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