This week could prove explosive. Good read here,
For the moment, let's forget about patterns, and indicators and cycles, all well and good, but let's return to technical analysis 101 - trend-channels. Right now we see the Dow Industrials and most major averages stuck in one - a sideways channel. The Industrials have been range-bound all of 2008, unable to escape the support of 11,700 and the resistance of 12,700 on a closing basis. The past week, the Industrials have acted like they want to rise, but the resistance line just won't let them. Charles Dow called these periods "lines." But we do know a couple of things. First of all, the longer this sideways range goes on, the deeper the breakout up or down out of this range will be. The second key point is, once prices breakout from this range, either above 12,700 or below 11,700, prices should run hard in a sharp up or down trend. So entering a position on a breakout should prove a worthy risk.
The phi mate and Bradley model turn dates this coming week could be indicating either another leg from 12,700 back down to 11,700, or a breakout from this range. We shall see. But even another leg down to support offers an 800 +/- move, which is decent if you are a trader.
A second key trend-channel is shown at the bottom of page 19. This is a downward channel connecting three tops since October 2007 for the upper boundary, which is an exact parallel of a lower boundary connecting the key August 2007 and January 2008 lows. If the Bear Market is over, prices must rally above the upper boundary, above 13,000ish.
Friday's McClellan Oscillator had a small change for the third day in a row, which is extremely rare, falling 6.11 to positive + 174.27, perhaps suggesting we are about to see a very large price move next week.
We focus this weekend heavily on the Trannies, as this appears to be the renegade stock average, where Bulls are resting most of their hopes. Trannies have given a flagrant downside non-confirmation, not closing below their January lows like the Industrials have - not yet - so Bulls are saying this means there is something unreliable about the Bear market decline. While that is true, Trannies still have time to confirm on the downside, and our analysis suggests they are in a corrective rally from January 2008, and that correction is just about complete, needing one more rally day or two, to 5,100ish +/-. From there a sharp decline should arrive, possibly starting later this week at our phi mate turn date.
This weekend's report also reports on our Primary Trend indicator which has reached an interesting juncture.
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