Federal,Analysis of todays move here,
Monday's rally finished off the Trannies Symmetrical Triangle pattern shown over the weekend, which required another rally, so prices can decline at any time. We have a phi mate turn date coming up this Friday +/- a few days, so again, a top is likely forming here, and prices can drop any time, into the next multi-week downtrend. Our Fibonacci Cluster window is here, another reason to expect a top of significance any time. Volume has lagged as this rally matures, which is Bearish. Also weighing heavy against this recent rally's perpetuity is a Bearish inter-market divergence between the major indices, with the Dow Industrials and NASDAQ Composite and 100 both registering new highs, above their July 2007 highs, however the Russell 2000,! S&P 500, and Trannies have not.
We would not be surprised to see another Hindenburg Omen observation over the next week or two, perhaps several observations, as conditions are ripening for another signal. What is the big deal with Hindenburg Omens? It means underlying weakness is occurring in the market, to a severe degree, a forerunner to significant declines.
Other conditions warning of an approaching top are the PPT indicator sitting within the range where declines can occur (they don't have to, but can), and the weekly Bollinger Band analysis, where Monday, the DJIA and NDX sit at the top of their respective upper BB, with the S&P 500 close to its top, where declines often start within a week or so.
Back on July 12th, 2007, the Dow Industrials rose 283 points as it put in the final small degree wave three to an eventual significant top just 5 days later. It sure didn't "feel" like a major top was days away on July 12th, but we had a phi mate turn date staring us in the face, scheduled for July 19th, and in fact that is exactly when the closing top occurred. Today, Monday, October 1st, saw a large 191.92 price rise in the Dow Industrials, another small degree wave three {3}, likely on its way to another top, a few days before our scheduled phi mate turn date of October 5th. An interest! ing parallel here.
