The rally out of the January/February low has been a technically challenging and extremely frustrating period. Memories are short and a lot of water has run under the bridge since the 2007 top, but I do not remember the counter-trend rallies following that top being as challenging and frustrating as the last several months have been.
I do remember the more extended rallies following the 2000 top, particularly the one that followed the September 2001 low. That advance carried price up into March 2002 and caused most people to think that the September 2001 low was THE low. As with that rally, the current rally has managed to go further and last longer than imagined and it certainly doesn’t feel as if it is possible for the longer-term statistic to be fulfilled this time either. While this rally has certainly pressed the envelope, we can’t control it and it hasn’t changed or negated the validity of the structure that fell into place in 2015. Therefore, while this rally has gone further and lasted longer than anticipated. It is like a stretched water balloon.
Something that is very important to recognize is that the Dow Theory Primary Bearish trend change from last summer still stands.
The odds overwhelmingly suggest that there may be a temporary pull back and a slingshot move to a new another setup and ultimately a collapse of the most extended and most manipulated cycle in stock market history. We are at or near an intermediate-term cycle top and more important than the advance into this top will be the decline out of this top.
In summary, I understand the frustration, doubt and confusion, especially looking at the S&P500 chart, and the volatility each week . . . up, down, up, down. I have the same emotions and I am simply not making any weekly moves.
Follow your monthly arrows and don't miss this ride, it is worth the cost of admission.
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