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The Future of The Market

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We appear to be in a bullish market right now.  I feel that this wont last that long.  I think that we still need to go back down to the lows I talked about before.  Let me explain:

After reading a few financial blogs, some people think that the DJIA and S&P are out of line with each other.  In some regards they are, but I think they are more in line with each other then others may thing.  I first want to show you two pictures, One of the SPX and the other of DJX.

As you can see, both pictures look very similar.  So my prediction for both will be the same.  I think, as we are seeing today, we will have a small pull back to the upward trend line.  We will then see a upward move in the market to the center of the orange circle, where all the congestion is.  As you can see this is where 2 major down trend lines meet and where a previous support line was.  This area is very crucial to what the market will do next.  

If we pass this mark in the orange circle then we will see the market go up into the blue circle.  This area is the last and final mark to determine if we are still in a long term bearish market.  If we pass this then we have passed all of the major downward trend lines.

Unfortunately, I don’t think we will pass through the blue circled area.  I don't even think we will pass through the orange circled area.

Now if we just hit the mark in the orange circle and move lower, which I think we will do, then we will see a trend downward to the marks i mentioned in a previous blog.  The main reason I don’t think we will get past this mark is because we have a lot of resistance.  we would need some strong push to make it through that.  We would need some really good news to come out.  

We just passed, on Monday, a pretty strong resistance line by going through the 50 day Moving Average, along with some shorter term down trend lines.  We had some really good news come out, but I think that people over reacted to the news because it was the first real good news in a long time.  It was also the first good news to maybe suggest that we are coming out of the recession. 

So, what i am saying is, we would need some really good news to get past the orange circled area.  We would need news saying we are out of the recession to get above the blue circled area.  I think we will get there this year, just not this month.  We still need to see one more “small drop” in the market before we are where we need to be.

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