All you need to do is look at the 2007-09 sequence. The early phase was characterized by denial as the media and market participants both felt the economy was only hitting a soft patch or coming in for a soft landing in 2007. It took a whole year for everyone to agree the subprime mess was not contained and you know the rest. Last year we went from soft patch to debt ceiling spectacle to European Lehman moment in a mere 6 months. By November we were reading the economy was in A DEPRESSION. This is only 11 weeks ago. By the way, we never heard the D word in the 2007-09 sequence. It was a Great Recession. Right now we are experiencing the next phase of the Greek crisis and if I can go out of character for a minute my heart goes out to those people. I don’t know how they do it. But in our work we still have worries that the EU can have the Lehman moment and as long as that kind of psychology sticks, I think there is a floor on any pullback. Don’t get me wrong, I think we can have a major shake of the tree but I also think that the way the market is configured fear would rise quickly and keep it from creating long term technical damage to the charts.
Getting back to Apple, it’s extended, it’s due and while it hasn’t turned the risk is elevated. If the market loses this kind of leadership it more than likely won’t survive without it. Without sounding like a broken record because I’ve talked about this for the last 3 weeks, I think risk is elevated and we are vulnerable for a correction this week.
Briefly, our weekend update is getting a fresh coat of paint and we are taking out a few redundant charts and introducing coverage of European markets. You can also follow me on Twitter @jeffgreenblatt.
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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.