Robert,
I agree with you and others here that we've seen the highs for the year in the SPX, Dow, OEX & NYSE. BUT... NO CRASH... not for several months... in fact, we're at the low end of a multimonth trading range that is at the late stages of being defined.
More importantly, there has never been a greater time than over the next few months to sink your teeth into the small cap market as it continues to regain lost ground to the big cap market over the last few years. I believe this heated s.c. rally will continue for 3 more months before the first major pullback sets in. Everyone who wants to make big money consistently over the next few months should immediately subscribe to "Market Gems" by Jenna and land the big opportunities she serves up daily.
Thus, I expect the rally in small caps and selected mid & fewer still large caps will prop the major indices up over the next few months, with downside to 1300 in the SPX (but not right away) and upside back up to the 1445. Sector rotation will continue to be in vogue, with nearly all sectors experiencing their moment in the sun over the next 3 months... THEN the bottom drops out, with the following 12 months characterized by sharp & swift declines followed by leisurely bounces that lull the average investor into believing the correction/bear mkt. is over. But the sins of the big cap bulls over the last 16 months were so great that it will take months and months of bear market activity to drain the contamination from the market.
In Elliott terms, we've seen a large scale Wave 1 rally off the Oct.'98 lows, which ended on 4/13/99. Since then, we've been in a very complex Wave 2 expanded flat corrective, with A of 2 completing on 10/18/99, B of 2 on 2/9/00, and now we're in C of 2.
From the 2/9 beginning, this C wave has surely gotten off to a strong start... But it looks like it has done too much damage too quickly to general market sentiment to make much more progress for now. Thus, I expect roughly 3 months of sideways activity with an upside bias (from down here). My guess is that swing trading will produce very profitable results, so the Don Sews of the world will be valuable resources.
I expect this C wave to bottom out in the 2nd quarter of 2001 somewhere around 1000 SPX.
Regards,
David |
