Short-Term, Here’s What I Expect

If ever the markets do break those levels, then what has been a brutal bear
market…gets even worse. BUT, as of this second, there is basically no chance
of it happening. The fact that the market went down to those levels and held for
third time just makes it a stronger low. BUT YES, I
WOULD SAY IT IS TIME FOR A PULLBACK. The market has now gone straight
up…and regardless of news, the market is overbought by any number of
measures…especially price. Dovetailing perfectly with a pullback scenario is
the fact that GOLD,
OIL and BONDS are now
oversold. There is now a direct inverse relationship between them and equity
prices. Until things change,  you sell the bounce in these areas while buying
the pullbacks in equities, and you can add the DOLLAR.

Before I go on, I had to mention that while the charts have worked very well for
us during the bear market, you must know that the market will remain subject to
events happening around the world and things can change quite quickly based on
those events. Shorter-term, expect the market to be whipped around, gapping up
and down based on overnight news in the Middle East.

Leadership is showing up in stocks moving to new highs as well as many laggards
starting to come up their right side. I am hoping for a pullback into support in
the names that have moved out.

I was asked many times over the weekend if this is a new bull market. My answer
is: I do not have a clue…and frankly, contrary to popular opinion, you don’t
need to have a clue…and the fact is, nobody knows. Oh, yes, there once was an
“I Dream of Jeannie” episode where Roger Healy got hold of next week’s newspaper.
If that happened to me, then I could tell you about next week. Where is Barbara
Eden when I need her?

If this is the start of something big, more and more stocks will move up the
right sides of their charts while leadership continues to break out. That will
be the only signpost I need.

But…every rally needs a little cold water thrown on it…so I will leave you
with this. This rally is acting suspiciously like every other bear market rally.
IT IS STRAIGHT UP…IT IS SHARP…IT IS QUICK…IT
STARTS TO MAKE YOU FEEL GOOD…IT GETS EVERYONE TALKING ABOUT THE END OF THE
BEAR…IT GETS YOU NERVOUS THAT YOU ARE NOT IN…IT SUCKS YOU IN…AND BURIES
YOU A SHORT WHILE LATER. I mention this again just in case. Just in
case this is another bear market rally, I have just put you on your guard.
Already, after an eight-day rally, the bulls are coming out of the
woodwork…after eight-days, by many measurements, sentiment is getting too
bullish after being bearish two weeks ago.

Take your time…the market will be open tomorrow…next week…next month…but
so far, so good.