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Monday, April 2, 2012

April No Fools Day

We are starting a new month, so we have new monthly pivots on the charts. I have drawn the lines where they are, the red/green lines on S2, P, and R2, the blue lines on S1 and R1. A couple of conclusions can be drawn: 1)a continuation of the rally will take us easily to at least R1, more probably R2, which should approxiamately mark the top for the month.  2) a break of P will signal either an imminent correction or an imminent intervention by the Fed. In any case, barring a serious problem, the market should not go lower than S2 for the month. If it does, get out your crash helmet. R2, by the way, squares with my ultimate target just above 1450 that I have been seeing with my projections. If we hit it, it's awfully hard for me to believe we will just keep going straight up.

 The Nasdaq appears to be in about the same shape, but with slightly higher relative volume. The price relative line looks like it has topped out for now, although it's probably way too early to say one way or the other. 
 The Dow industrials are also showing a possible trend change in price relative, but again, it is way too early to make that call.
The Russell 2000, which is really having a lot of trouble here, It is, however, still above P, and headed up. I expect that this will hit at least R1 and possibly R2 sometime this month. And, of course, it should not go higher than that.

Well, I wure would like to make up my mind abut what the market is going to do this month, but so far everything looks neutral to me. I suspect we will be doing a lot of sideways movement in April, with a very good possibility of a May correction. Watch for signs of distribution to make sure it doesn't happen before then.

I will have the new highs update shortly.

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