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Strategies & Market Trends : Technical Analysis With Charts

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From: MACD X	12/30/2006 2:30:38 PM
	of 6865

Chart of the day chartoftheday.com This is an interesting chart. It shows that the rally in progress is the 4th largest of all times. That is for the Dow, good chances are that the russel , Nazdaq, is much higher up the chart because the Dow actually has been a great moving part of the rally from the 2002 bottom So what does it mean? With the beating the nazdaq took starting in 2000 to 2002 you would expect the counter rally to be long in duration and percentage and it has been for the nazdaq doing over 100%. So we have a rally that is long in duration and high percentage wise for the broader market. We have a volitility reading that has never been lower and a inverted yield curve. P.E. ratios that are historically high and you have all that is needed for a crash. Problem is the market usually goes to extreme in which ever direction that it goes. And are we extreme yet? Not according to the chart above. But we are close. Other thing to consider when doing a new year prediction is cycles, the years preceding a presidential election has historically been the sweet spot going back many years. 2007 is that year and historically should be expected to be a great year. But years ending in 7 have historically been the worst years in the market. So once again there is no clear path. But what I will say is that I believe that 2007 will be a great year for traders. It should be a year of a strong trend and not sideways trading as has been the case for the last couple of years. This is good news. Us a traders should have a great advantage this year especially if the market is down. Jumping on a trend and riding it out seem a good thought for the up coming year. We are no sure which direction, I have a bias for the downside, but play what happens. 2007 should be a great trading year.

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