Bullish Outlook Re-Issued
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).
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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