Friday, December 27, 2013

Market Update

Another day, another all time high. The question is when will this all stop and what kind of a correction the market will get when the Santa period is over. Unlike last year, the market is going into the new year in a prolonged rally and not a correction. So January might be the start of a stronger correction and perhaps the LT Int W4 I was looking for when the market topped at 1813 will finally show up. If the correction doesn't come in January but keeps rallying then bears might just have to wait until Spring for the real correction to start as that would mean people are just chasing returns and are afraid to miss out on gains. Which is a recipe for a big sell off, so the sooner  a healthy correction comes the better for the market.  At this point, the market is starting to get expensive and another 20% upside would officially place the market in bubble territory, specially without a good correction. One fundamental indicator I follow is the Market Cap to GDP and should the market go to 1.5 (On the chart) then that will be the time to short the market or go into bonds/cash. Perhaps we'll see the market match its previous peak in 2000 at the end of LT Int W5? At that point bears will finally be right but most won't have money to short.

I am keeping my short and long positions until I see profitable exits, which might come as soon as next week hopefully.

Have a great weekend!

Short Term Trend = Bullish
Medium Term Trend = Bullish
Long Term Trend = Bullish

* Trends are not trade signals. Trends are posted for situational awareness only and does not take into account wave counts, technical or fundamental conditions of the market. While mechanically trading the posted trends is feasible, keep in mind that these are lagging indicators and as such are prone to whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking into consideration other factors. 

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