Change In The Wind by Lee Adler, Saturday March 12 2005
wallstreetexaminer.com
The market didn't quite put an exclamation point on the statement, but it took a big step toward confirming a trend change on Friday.
Another down day, or even a flat day, could trigger strong confirmation of a downturn in the 10-13 week cycle. In the short run, a bounce or sideways up phase in the 13 day cycle could delay the breakdown. Even so, it should come within the next week or so.
At the same time, 10-12 month and 18 month cycle indicators are also in position to roll over. This has the potential to be a fully synchronized turn in a number of intermediate cycles. Once those signals are confirmed it will be time for longs to be generally out of the market, while bears get their long awaited day in the sun. There will be opportunities for significant profits on the short side for those able to swing that way.
The next couple of days will be interesting. If the expected 13 day cycle up phase is weak, or doesn't materialize, the most bearish scenario may be realized. On the other hand, if the 13 day cycle up phase turns into a strong bounce, the big downturn could be delayed indefinitely.
As usual, the liquidity environment doesn't look particularly favorable. As reported in the daily Money and The Fed report, foreign central banks are acting like they are maxed out in terms of their ability and will to continue supporting US debt at the ever increasing levels needed to prevent a fracture. The Treasury is going to continue to pound the market with new supply. The Fed is not accommodative, and has not been monetizing the new Treasuries at all. As a result, long term bond yields ratcheting upward are about to put an end to the mortgage bubble, and the liquidity flowing from it, once and for all. Major change is in the wind. |
