OK, for the first time in weeks, a light bulb actually appeared over my head. I have stared at the index charts over and over again. I have done so sitting down; standing up; up close; at a distance; I've looked at intraday bars spanning months and daily bars spanning decades. It's been quite a sight this morning in Tim's home office.
But I finally am comfortable with postulating a direction in the near-term.
I think the Dow's good for about another 300 points on the upside, and the S&P for about another 50 points. These would both achieve the 61.8% retracement levels as measured from 2007's peak to 2009's low. These levels also line up nicely with some other studies I've laid down on the charts.
Above is the S&P 500 with the suggested target. Below I've revived the 1938 analog – – which makes sense to me again, given what I'm seeing this morning – – shown side-by-side with the present day.
Once the 61.8% level is achieved, I think we could finally be in for some temporary weakness, good for maybe 800 Dow points before serious strength is found again. I also think the high this month would – dare I say it? – finally mark a top.
This actually sort of makes sense in the context of April too. Good Friday's jobs report will almost certainly send the market higher on Monday, and the increasingly sunny news about the economy is bound to cause some retail buying. This is the fuel for the rise. What would cause the modest reversal then? Earnings, I would think, which start in earnest a couple of weeks from now.
Anyway, those are my thoughts this Saturday. I'm not as gung-ho on time analogs as I used to be, but I think the above is worth considering.
