To Understand Current Market Trends, Look to the Past

Stan Harley |

Low This Week, Countertrend Rally

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The southbound cascade from the late February highs picked up speed today with the broad market averages down a hefty 1.5 -2%. In studying the hourly patterns, it would appear we could see the first in a series of two lows later this week – sometime either Wednesday near the close, or perhaps carrying into Friday morning. Following some kind of countertrend rally back up towards the highs and ending later this month, I think we may be setting up for a more serious whack in the market carrying into April 3. 

 

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That decline would set the technical underpinnings for divergences of import at the final high, which I am still tentatively targeting for the May 11/12 time period. A blueprint – but not a Xerox copy – would be to take a look at the July – October 2007 time period.  From a July 19 high that year, the market sold off sharply into mid-August, then rallied back to form the October 2007 top. I think a similar process in the current market cycle may now be underway.    

Treasury Bonds / Yield

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Bond prices – and the TLT – are rallying out of the latest 84.3 TD cycle. I look for price to rally back to at least tag the now-flattened 50 day moving average, stall out, then roll back over and eventually hit the 200 day moving average.

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Each month, Stan Harley publishes TheHarley 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 March. 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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