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"Stocks: A Big Day
Wednesday was a big day as the market finally did what we thought it should
be doing - rallying into the Fourth of July holiday weekend. However, we
have to warn that this rally is the last hurrah for the bull run that began
in mid-March.
The Bradley has an ideal high due today (Thursday, July 3rd). That suggests
that some kind of reversal is imminent. With the Employment Report due out
early Thursday morning, we have the potential for that reversal. However, if
the report is favorable, it's possible for the market to continue higher
into next week (the 10th comes up as a significant turn date if the market
can maintain an upward trend into next week). Remember, as time goes on, the
market becomes ever more vulnerable to bad news. But, as time goes on, those
who are interested in short selling will have the odds increasingly on their
side.
For those who are into the nitty gritty of technical indicators, the Bradley
indicator is composed of the summation of three time series internally. We
have a chart which breaks those three time series out in case you're
interested (click here for the chart). The first time series in yellow
topped last Friday, the second in violet on Wednesday. The third time series
will top on the 10th, coincident with the apex of the recent contracting
triangle formation we mentioned in yesterday's update. That's more evidence
of the key role next week will play if the market can maintain its bullish
trend that long. That's also one good reason to be circumspect about putting
out short positions prematurely - even though stocks are incredibly
overvalued, they can stay that way longer than your account can stay above
water. It's best to sell the market short only after a dip has failed to
move the market to a new relative high. Patience will pay in this regard.
Once the market starts down the slippery slope, it should continue down for
several months, bottoming late this year, or early next, as the longer term
time cycles are due to bottom. "
bobr
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