The State of the Trend

By: George Krum | Sat, Oct 15, 2011
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When both the bullish and bearish scenario as outlined in last week's article point to higher prices ahead, it should come as no surprise that the SP500 advanced almost 6% in one week.

In the process, the SPX almost reached the target area where the index should stall according to the bearish outlook:

There are increasing signs that a change in the market's character is taking place, although market internals have not registered oversold levels yet. If anything, the negative divergence of market internals with price is indicative of an approaching swing top:

At this point, it may be useful to introduce another bullish/bearish chart set which may shed additional light on where the market is headed for the rest of the year.

The Bear Forecast, first published in December last year, shows a .75 correlation with price action in 2011. If the forecast remains accurate for the last quarter, then we should expect range-bound market action:

From a dominant cycle point of view, however, 2011 shows highest correlation with 1998. And if that continues for the months ahead, the current rally may have some legs:



George Krum

Author: George Krum

George Krum

George Krum is the author of the "CIT Dates" blog, and the following apps available from iTunes:

OddsTrader - uses the power of Hurst Channels to produce price and time targets, and combines them with proper risk and position size management.

OT Trend - helps you quantify and forecast the seemingly random ebb and flow of stock, index or mutual fund movement.

OT Fibonacci - automates the process of applying Fibonacci numbers, ratios and time series to any security.

OT Seasonal - allows you to perform seasonal analysis on practically any security from around the world and to build long-term forecasts and models.

OT Pairs - is the first mobile app that gives users access to one of the most profitable and time tested hedge fund trading strategies.

OT Pivots - combines the power of Pivot lines with cycles and automatic signal generation.

Gann 9 - is the only financial app that allows users to effortlessly apply the legendary W.D. Gann's tools and methods for trading (including the Square of 9).

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Source: The Contrarian Take