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Strategies & Market Trends : The Stock Market Bubble

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To: Roger A. Babb who wrote (26)	4/23/1998 11:21:00 AM
From: Les H	Read Replies (2) of 3339

Buying of gold stocks has been usually precedent to stock market dips and corrections. This is one of the longer rallies, almost a month. Last April and September, gold rallied prior to decline in market. It 's indicative of speculation in the market. In terms of cyclical patterns, the market has been in a 10-15 week cycle for bull runs (except for 1995 which came after a 9 month bear market). The current run reaches 15 weeks in first week of May. There is also a shorter monthly cycle that peaks next week. This is the third up-wave since the January lows, completing the five wave pattern. However, the market is still working on forming the first top (a reference point) for this run. Typically, the second top occurs 4-8 weeks after the first. In that interim period between tops, divergences occur and negative momentum appears. You need momentum to turn negative such as weekly MACD and RSI (both of which are now in overbought territory). By the second top, they are trending down. The dollar and the interest rates seem to have completed their trends and may reverse. A strong GDP report next week may be the catalyst for pushing the bonds over 6%.

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