One of 3 things is going to happen. Obama wins and doesn’t learn his lesson. If that happens we stay stuck in this 70’s style market for a few more years. Obama wins and he does learn his lesson. If America puts in a more moderate style Congress which throws some of the bums out and it inspires confidence it could set off a new cycle bull. Or Obama loses to a candidate who captures the imagination of the American people and America takes to that leader the way it once did for Reagan and Roosevelt. Then I think you’d see a new secular bull market.
What I’m trying to tell you is I think the country is going to start recovering from the panic of 2008 by the end of 2012. By the way, with the birth of the nation in 1776 the 08-09 bottoming process was in the 233 (Fibonacci) year of the republic. With 2012 looming, we close the big 236 year window next year and likely pull away from the crisis point.
There was a big shift in sentiment because we went from the worst turkey week since 1932 to one of the best stock market weeks ever. Is it a coincidence that Gingrich went to the top of his leaderboard in the same time frame? If nothing else the rally got us away from the October bottom and it did so without even having an exact test. That’s bullish by itself.
So it was a phenomenal week. But by Friday we hit a sell the news event with the jobs number. The near term was slightly tilted in favor of bears. Friday was the kind of day where bears gained 3 steps and gave 2 back. This week should be rocky. I suspect the early part of the week should have turbulence. But this is the time of year for stocks to rally. If there is a problem with this market and now I only see one, it’s the fact that China is not participating to any extent. We’ll have to keep our eye on that. It’s now squarely in a 261 day window so anything can happen. Finally, the CRB chart is holding that big brown line we discussed last week.
Sunday night was bullish and the NQ broke its near term micro channel. That’s also bullish but no confirmation of a low yet and a turn back up. We could very easily retest Friday’s low or take it out and then turn back up. It might get rocky here but I’ve seen enough to believe we’ve started the Santa rally to the end of the year.
Click chart to enlarge
Jeff Greenblatt is the author of Breakthrough Strategies For Predicting Any Market, editor of the Fibonacci Forecaster, director of Lucas Wave International, LLC. and a private trader for the past eight years.
Lucas Wave International (https://www.lucaswaveinternational.com) provides forecasts of financial markets via the Fibonacci Forecaster and other reports. The company provides coaching/seminars to teach traders around the world about this cutting edge methodology.