Regular readers may have a sense of deja vu, but yes, I did a similarly-titled post just a couple of weeks ago. Anyway……
I've seen more than a few pieces of evidence pointing toward the market continuing to push higher through early March. I'm not sure I could stomach that, but having survived the past ten months, I feel that I can steel myself for anything at this point.
More importantly, I've been examining the 1937-1942 analog from a Fibonacci perspective. Here's the Dow 30 from 1937/1938, with retracements drawn between the extremes. Take note of the magenta-tinted area, at 61.8, since that's where the rally pooped out.
(1) On a percentage basis, we have already matched the rally;
(2) But on a Fibonacci retracement basis, we've still got some higher prices to go.
Below is the current Dow 30 chart, drawn with the same retracement levels. The yellow tint shows the 700 Dow points that are left before we're at 61.8% (and I emphasize again, we've already had a sufficient rally in percentage terms, but there's still 700 points of potential upside).
So what's it going to be? A top around here, or a top at 11,250? I think the reaction to Friday's jobs number is going to be a very big indicator as to which of these potentials will unfold.