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Holiday Rally Looks to be a Turkey

By: Ed Carlson | Wednesday, November 14, 2012

A rally into the U.S. Thanksgiving holiday is standard fare for the equity markets as it is for most holiday-shortened weeks. There should be plenty of meat for the bulls; unfortunately, it looks to be a bull-trap.

Leading cyclical groups such as semiconductors appear to be setting up for a rally. The SOX has broken its downtrend with the rally on November 1. A rising bandwidth indicator (BWI) confirms the rally by its advance and signals a non-confirmation of the decline of the last several days with its own decline.

SOX Chart
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Mirror Interval
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Before the rally begins, however, a mirror image interval has the potential to occur as the distance between the lows on 12/19/11 and 6/4/12 is 168 calendar days. Counting forward an equidistance of 168 days targets a possible low on Monday, November 19 - just in time for the seasonal rally into the Thanksgiving holiday to begin.

This forecast matches my expectation of this date as a fade-date (fade whatever move is seen on this day). A 107-day interval (102-112 calendar days) from a market inflection point (8/2/12) exists and is 38.2% of the distance between the forecasted date (11/19/12) and another market inflection point (2/9/12). When combined with a 221-day interval (221-225 calendar days) this creates a fade-date. 11/19/12 is 223 days from the low of 4/10/12.

Fade
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That's the set-up for our holiday rally but why expect it will be a 'turkey'? Because an ascending middle section points to a market high on November 26. Point C on 12/13/11 of an ascending middle section counts 174 days to the low on 6/4/12. Counting forward an equidistance of 174 days targets a turning point on Sunday, November 25. Ascending middle sections normally count to market highs. This high occurs just after the Thanksgiving holiday and is expected to kick-off a final market decline prior to the year-end Santa Claus rally.

Nov 26 Turning Point
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Author: Ed Carlson

Ed Carlson
Seattle Technical Advisors.com

Ed Carlson

Ed Carlson, author of George Lindsay and the Art of Technical Analysis, and his new book, George Lindsay's An Aid to Timing is an independent trader, consultant, and Chartered Market Technician (CMT) based in Seattle. Carlson manages the website Seattle Technical Advisors.com, where he publishes daily and weekly commentary. He spent twenty years as a stockbroker and holds an M.B.A. from Wichita State University.

Copyright © 2012-2014 Ed Carlson