Market forces Feb 6, 2010
Friday the market behaved pretty much as we expected. The DOW fell from1002.18 down to 9835.09 and we personally went to 85% invested. Then the DOW rose to close 10.05 points higher than the start; 10012.23.
The lying raw NYSE (not corrected for trading volume) fell through the neckline but closed still 0.5% above the sell signal threshold of the October 30 low. The uncorrected stock index was deceptively optimistic but the correct index says that after the next high that the market will break down again and likely set a new low… lower than October 30. We still expect that rally in the coming month will bring the averages close to or slightly exceeding previous highs and thus again misleading and luring most investors into thinking that the selling pressure is over. They will buy high. At those levels our volume-corrected index will likely show an ominous cascading lower high. That could be a few weeks away and would be the next profit taking opportunity. Then hold on to your hat again!
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