Yes, I think trouble is brewing. While I expect a rally I do not think that it will take out the tops set in early March. The charts are definitely set up for a rally but to what end?
If you look back on some of those charts you will see that the market has traded lower in the past even as the market breadth indicators were improving.
What I expect now is a series of lower highs and lower lows as the market sets up some positive divergences to form a lower bottom. There will be numerous rally attempts before we form an ultimate long term bottom.
That long term bottom should still be around 1 1/2 years from now in my best estimation.
I'm combining Presidential or Election Year Cycles with market breadth and sentiment analysis to come up with this hypothesis.
We will just have to wait and see. If the volatility indices spike high enough and the Investors Intelligence Poll finally has more bears than bulls then that will go a long way towards helping to define the next true long term market bottom.
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