LONG TERM: BULLISH

We continue to label the stock market activity from the Oct 2002 low, the same as we have when we identified that significant bottom: a bull market. All four of our major indices NAZ/NDX/SPX/DOW are currently all aligned with basically the same wave patterns, which in itself is unusual. A summary review of our 'bullmkt' charts will display the exact wave labeling we have used all along. This bull market consists of five primary waves: I - V, as part of Cycle wave One from the Oct 2002 low. Primary waves I - IV have already completed and we are in primary wave V. This last primary wave has been subdividing into two lesser degrees of waves: major (1 - 5) and intermediate (i - v). Thus far, we have completed major waves 1 - 2, and intermediate waves i - ii, and are currently in intermediate wave iii. Upon completion of wave iii, we should correct in a wave iv, advance again in a wave v, (completing wave 3), correct in a wave 4 and then top off the bull market in a wave 5. This should all conclude sometime in the year 2007. So there is plenty left in this bull market.

 

INTERMEDIATE TERM: UPTREND

Today when I tabulated the weekly figures I noticed that my MMI (market momentum indicator) for the NAZ/SPX/DOW has just exceeded the high in momentum of the previous uptrend: wave i. This adds to our conviction that this is indeed wave iii: third waves are usually stronger than first waves in momentum. Based upon the numbers for the NAZ I would guesstimate that we are about halfway through the uptrend. This would indicate a top around mid to late January. We are labeling this uptrend as having completed minor waves 1 - 2, and we are currently in minute wave v of minor wave 3, having already completed minute waves i - iv. After wave 3 concludes, we should get a pullback similar to wave 2, and then another very strong advance to complete this uptrend. The SOX (semiconductors) index moved very strongly over the past two days, making new highs for the uptrend. The TRANsports continue to act well, indicating a growing economy, which was confirmed this week by the very strong revised third quarter GDP numbers: +4.8%. So everything remains on track. We've posted new 'daily' charts.

 

SHORT TERM: POSITIVE

After the early to midweek selling concluded on wednesday, (ending wave iv), the market exploded upward thursday, (kicking off wave v), and nicely consolidated these gains on friday. We've labeled the thursday rally as wave 1 and todays consolidation as wave 2. Expecting the advance to resume on monday and probably top sometime next week. Today, again, the NAZ/NDX and SOX made new highs, while the SPX/DOW/TRAN lagged. In fact, the NDX closed at the high for the day! Everything seems to be going along as expected. We've posted new 15 minute charts. Best to your week and good trading!