So how could we trend yet stay in a trading range this year? Very easily, we could go back to the high end of the range and go to the bottom again. The problem with this market is we’ve been frustrated because we’ve stayed in the middle of the range so long. Am I trying to hedge myself? Not really because we have a market that doesn’t have a clear indication. If the VIX were not sitting in the low 20’s right now I’d come here and tell you I think the market would be much higher in 2012. But my problem is I think the market wants to go higher yet is starting from a place where there is a sentiment/psychology based ceiling on things. From the VIX we observe that we are much closer to the space where we see intermediate to longer tops than bottoms.
To start the year I do think markets will make attempt to go higher as we had some good readings on the Euro. However, since these readings materialized out of a light volume holiday environment we can only give it so much weight. But I’m a firm believer that light volume or no, markets do reveal their intent. They should start higher, whether they can sustain is another story.
Finally, the economy peaked in the middle of 2007, by the summer it will be 5 years. I think it’s time the economy finally bottoms for good.
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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.