Zeev:
Steve Saville thinks a major top may be VERY close.
We are currently at a very interesting juncture. As mentioned in the latest
Weekly Update, the top of the channel in which the S&P500 Index has been
travelling since the first quarter of 2000 lies at around the 920 level. In
other words, at the close of trading on Tuesday the S&P00 was within 1% of
its channel top. At the same time, sentiment indicators are revealing
extremes of bullishness. This tells us that the market could be close to a
very important peak (a peak from which a major decline will begin).
Also supporting the idea that an important peak is at hand is the fact that
Tuesday's stock market surge was not confirmed by other markets. For
example, bonds were flat and the US$ was weak.
Further to the above, a pullback is likely to begin very soon (the next day
or so) and this pullback will POTENTIALLY evolve into a major decline.
Whether it does or not will be determined by the behaviour of sentiment
indicators relative to price action (a small decline that generates
considerable fear would be bullish whereas a moderate decline that generates
no fear would be bearish).
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