By: Andre_Gratian
For the past five weeks SPX has traded roughly between 1840 and 1883, with the DJIA making a somewhat similar pattern. Russell 2000 and NDX, however, have experienced more concentrated selling. With a cycle low not due for another few days, it is likely that the correction will continue — and perhaps intensify — throughout most of next week. When it has come to an end, it should be followed by a rally, the nature and duration of which should give us a good sense of what the market has in store for us.
There is a good possibility that the rally could turn out to be very short. Mid-April will be a critical period to watch for a potential resumption and extension of the correction which would then have a good chance of becoming one of intermediate dimension and last until July. If this is the case, we could be witnessing not a simple correction, but the making of a top which could remain unchallenged for the rest of the year. The long-term cycles which are scheduled to bottom in October would probably have made their presence felt long ago if it had not been for the Fed’s intervention. They could take hold at any time and, once they do, they won’t let go until they have made their lows.
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