Difficult to know what to say after a day like yesterday.Bears are capitulating,some people are saying technical analysis doesn't work in a market dominated by Fed manipulation and algorithms.My primary belief is that markets are driven by cycles and that no-one can alter the cycle whether its Bunker Hunt or Ben Bernanke.The BoJ eased yesterday and included etf's in the list of assets it may purchase.Maybe I am wrong and central banks can create another super-bubble even as the economy deteriorates.I fear for our economic future if they succeed.I believe we are in a bear flag pattern and are tagging the long-term trendline from the 2007 highs.However we are pushing the limits here.Ron Walker has discussed this well in his videos and I would also recommend his public charts.(the chartpatterntrader) I would also recommend the videos from perfectstockalert and agree with their assertion that these rallies are on light volume,negative divergence.overly bullish sentiment and are leaving too many gaps and will ultimately be retraced violently...they express this with more conviction than I could !
The euro may be close to a top,it is tagging a major .618 retracement and wave structure is almost complete.There is a 4 month Gann cycle this week Problems in Euroland are almost certain toresurface and grab investors' attention again soon,in my view.That is not to say the US does not have problems of its own,not least the State funding crisis that could also erupt at any time.A turn in the dollar may trigger the end of this equity rally.
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