We had noted in several earlier comments that there was an unusual confluence of bearish Candlestick patterns, as well as Indicator readings, which forecasted a decline in the stock Indexes. Those forecasts came true over the following several days as the Indexes fell.
The Candlesticks excel at calling reversals of trend. What they do not do is to predict the extent or length in time of the change. Even in the space of 7 or 8 days we now see that conditions have changed yet again, whereby the signals are calling for price increases in the Indexes – and they have already begun.
We need to bear in mind that the Rally which began on March 10 may not be over. Optimism and euphoria have not yet reached a stage similar to the conditions which obtained at the height of the advance in early 2000 or at the top of the bounceback in the Fall of 2007. We think it is probable that Index prices will advance further prior to the top of the Rally, even as high as 10000 on the Dow Industrials.
