Prepare for Market Highs in Early May

Stan Harley |

Bullish Outlook Re-Issued

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I’ve been targeting the April 6th time period for what I had envisioned as an important trading cycle low. “Cycle lows” are sometimes mis-perceived as “price lows.”  Sometimes they are, sometimes they are not. A cycle low – by my definition – is the point at which price velocity balloons (or expands) in the direction opposite to that which preceded it. Thus, for a cycle bottom to occur, we may or may not see a break in price to a new low for the move but we do need to see indicators that measure price velocity turn back to the upside in a measureable way. The Dow Jones Transports broke to new lows today - unconfirmed by any other of the Big 5 (DJIA, SPX, NYA, COMPQ). 

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Measures of price velocity on my S&P model turned up. It certainly does look like yesterday was my low. We need to see an upturn in the Transports to be absolutely certain - but so far it looks like we're there. And other than the Dow Transports, the remaining four components of what I refer to as the Big 5 were up strongly today. In summary, I believe today did, in fact, mark the cyclical turn I was anticipating for the “April 6th time period.” As such, I am advising a return to the BULLISH side of equities at this juncture. A move higher into early-mid May should now be getting underway.

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Each month, Stan Harley publishes The Harley Market Letter, a newsletter that provides advanced technical analysis of stocks, bonds, and precious metals. This is the latest update to the Harley Market Letter for April. Want to learn more from acclaimed market analyst Stan Harley? Visit his site and subscribe to the full Harley Market Letter.   

 

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