The State of the Trend

By: George Krum | Sun, Jan 6, 2013
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Despite all the hoopla surrounding the 12th hour fiscal cliff negotiations, the markets did what they always do: swinging from overbought to oversold and back to overbought condition. As the chart below shows, market internals became oversold on December 28th and are nearing overbought levels once again:

In our last article for 2012 we surmised that as long as the SPX stays above 1390-1400, the index will most likely embark on a more sustainable trend, similar to that of December '11 - March '12, or June - September '12:

Well, the jury is still out as price is within both channels, but with mounting overhead resistance and ovebought market internals, it seems more likely that the index will continue following the 2012 channel. As long as price remains within that channel and manages to break above the 1470-1475 zone, the next immediate target level becomes 1500.

We've mentioned the OT Seasonal app several times in the past, and for those who follow seasonal analysis, cycles, and in particular the decennial cycle, here's a heads-up: if you look at the decennial cycle for years ending in 3, you'll notice that during the last 120 years of DJIA history, there have been six bullish and six bearish years. Therefore, in addition to the composite cycle it would make sense to keep an eye on the bullish and bearish year cycles, which may provide a more accurate picture of what's in store in 2013:



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